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Is there a rise in the number of women buying into the Mercedes-Benz brand?
In India, we are seeing the average age of our customers coming down to 38 years, and we are also increasingly seeing more women entering our brand. Interestingly, women comprise 15 percent of our customer base in India. As diversity takes centre stage, and women participation continues to grow in the workforce across organisations, the women purchasing power is emerging as a significant influencing factor around the world. Therefore, we anticipate more women entering the luxury car segment as a global trend in the future.
How is the top-end vehicle segment shaping for Mercedes-Benz in India, and globally?
The top-end vehicle (TEV) segment for Mercedes-Benz is growing relatively well in India, and we are registering double-digit growth in this category. We anticipate to continue experiencing this in the future as well. It all depends on the brand positioning, which is pivotal to our customers, who are willing to pay the price premium if there is a value proposition. Therefore, we are focusing on creating the right desirability into our products, bringing the right products, and ensuring a top-notch customer experience, as expected from a luxury brand.
This is why we believe in India, and while one may say that the TEV segment is only 1.2 percent of the total passenger car market, our aim is to capture our fair share of this segment, which still offers a lot of untapped potential. Therefore, we plan to enter 10 new cities with 20 retail outlets in CY24, and this reaffirms our commitment to the TEV category in India. As a matter of fact, out of the 12 new models that we plan to introduce in India in CY24, half of them belong to the TEV segment.
We see the demand in the TEV segment to be quite stable across most of our markets in the overseas region, which comprises countries such as the UAE, Japan, and Korea, among others, which are all registering strong growth in sales of high-end models like Maybach.
How has RoTF enabled a transformation in the luxury buying experience for customers?
When it comes to customer experience, it is important for us to offer a consistent and standardised brand experience across our touchpoints. The second part of this luxury experience is to have the right facilities that support this vision by virtue of their ambience, and service. With the upgrade of our touchpoints to the MAR 20X format, showroom traffic is picking up, and customers are enjoying spending time in our outlets. Therefore, this does make a fundamental difference.
Thirdly, there must also be a consistency in our systems and processes, and it is here that we leverage our customer data to tailor and adapt our services to offer them the best experience. Therefore, the transition to the Retail of The Future (RoTF) sales format has enabled us to understand consumer preferences, and train our people to react in a certain way, and equip them with the right way of handling luxury customers, who have completely different expectations while buying a car. In terms of expansion, we are prioritising our proximity to the customers, who must not travel more than two hours for getting their vehicles serviced. With India being a large country, we do find several white spots when it comes to the service capacity. We are planning to expand into new cities, ranging from Jammu in the North, to Vapi in the West, and Kottayam in the South. We are also significantly expanding in Uttar Pradesh in CY24 by entering cities like Kanpur, Varanasi, and Agra.
What ratio of TEV customers walk into showrooms? How does M-B realise such sales?
It is quite interesting and varies from market to market. Quite a lot of our top-end customers do not necessarily walk into showrooms, and one must have the right communication touchpoints, and dedicated events towards such buyers. For instance, the vehicle driver forms the first communication touchpoint while bringing in the car for service.
Dealers who are more successful here, are the ones who have been able to offer lifetime value to customers, whilst also ensuring that they have a single point-of-contact (SPOC) representative at the showroom. It is here where Mercedes-Benz India has been able to introduce a SPOC for our TEV customers in most of our dealerships. While these are small elements, they all contribute to deliver a luxury experience, as luxury is all about the detail.
What is Mercedes-Benz’s EV roadmap for India? What is your take on hybrids?
While we are witnessing a slower-than-anticipated EV adoption in India, our perspective has not changed when it comes to electrification. We believe the future for us is electric, and therefore, our strategic direction, and ‘Ambition 2039’ that aims to make our entire value chain carbon neutral, remains steadfast. We will continue to focus on driving sustainability for our organisation, consumers, and the markets in which we operate.
Having said that, we must take cognisance of the customer, and are going at a pace according to the way our customers are evolving in the Indian market. Therefore, we are not defining any target at this moment, but are creating the right fundamentals that foster electrification. While EV penetration was pegged at 4 percent of our total sales in India in CY23, we are confident to witness double-digit growth for electrification for our future product range within this market.
Coming to hybrids, I think the better strategy for India is to go fully electric as opposed to plug-in hybrids. We will continue with the full offensive and bring more EVs to India. We will introduce three new EVs in India in CY24.
How does the company view growing competition from possible entry of players such Tesla?
We completely embrace the entrance of new competition into the market. We believe that competition is good for the consumer, sustainability, and the industry. As Mercedes-Benz, we have also been a recipient of tremendous government support over the years for setting up our plant or facilities, and the entire ecosystem in India. And we believe that we can still operate quite competitively within the current regulations and policies that are there.
Therefore, we are not concerned about the entrance of new competitors into the market, and if anything, it will be great for the Indian automotive industry and consumers. At the end of the day, it will all boil down to the product differentiation, desirability, and customer experience.
This interview was first published in Autocar Professional’s March 15, 2024 issue.
