The senior management team of Mercedes- Benz India, were down in full strength in Goa recently for the launch of a new showroom. In an interview Roland Folger, managing director and CEO, Mercedes-Benz India, talks on range of issues. He points out to Shoma Patnaik that potential for luxury cars in India is significant but favorable taxation is required for the market to boom
What are your expectations from the festive season?
Traditionally during the festive season we do significant amount of our overall volumes. September- October are normally busy season for us because of marriage, festivals and our vehicles being highly sought after brand. August was a good for us because there were announcements that prices will go up after the cess. Basically we assume that demand will go down depending on the cess rate, at least for a short while.
What do think of the overall demand for luxury cars in India?
I strongly believe in the overall growth story of the Indian market especially the luxury segment. In the past one always looked at the market in direct comparison to other countries. In India the penetration of luxury automobiles coming in at about 36,000 vehicles is a fraction of the total car market. It is 1.2 per cent or even less percentage wise. In other countries, even in South East Asia the luxury segment is three to four per cent of the total. For India to achieve three- four times penetration is not difficult at all. You can consider that as the growth potential.
You feel very strongly about taxation on luxury cars?
Why does there need to be an additional cess over maximum 28 per ent GST. In the worst case scenario luxury cars will probably have higher cess than sin goods like tobacco or alcohol. In my point of view there is no reason for such high tax rate. We contribute massively to jobs in India bringing in new technology on the safety side and on emission regulation. On the other hand we feel that the government is trying to punish the luxury segment for its development which is penny wise but pound foolish. Because by introducing the high taxation the government is not letting the segment grow naturally. We also have been telling to policy makers that, allowing the market to increase would have created more revenues to the government than before.
As the leading player in luxury segment what will be your strategy to stay ahead of competitors?
At the moment we are significantly ahead of everybody else. For the last two-three years we have been ahead of the pack although our prices are ahead of rivals. Mercedes- Benz in India sold 7,171 vehicles during the January- June 2017 period. We have the highest market share of 45-50 per cent in the segment. Recently we came out with significant improvements on our life cycle costs. We have introduced service packages in the market place and come up with very aggressive financing. We are committed to bringing the cost of owner ship down without discounts. Because discounts are not the solution to increasing sales but overall costs of ownership. Our largest dealerships network among rivals is the differentiating factor. Currently we are 86 outlets in 42 cities. The continuous improvement in the ambience, the investment into the dealership, the training that goes to our staff is basically securing customers
Do you have plans to manufacture in India and export?
Long term exporting would be interesting for us but for that we need the volumes. You need exporting scale effects. At the moment we are producing about 15,000 vehicles. We have capacity of 20,000 vehicles and can easily double that overnight. But again lot depends on the taxation and favorable climate. We are making the super-luxury Maybach locally. The India plant is the only one in the world allowed to make the Maybach outside of Germany. Quality is not the concern in making in India only volumes. Again the challenge in exports is, where do we export? Because all the countries with right hand drive have their own plants.
New showroom raises the bar for luxury car dealers
Counto Motors new Mercedes- Benz showroom in Kadamba highway, Ribander, is a statement in style and efficiency. Comfortable yet luxurious, the showroom is spread across 34,000 sq.ft., with space for nine car display and 14 bays dedicated for repairs. The outlet is equipped to service up to 2,700 cars a year. It is set up with an investment of Rs 10 crore and created in a span of 18 months. As a 3S facility, the store will sell and service all variants of Mercedes- Benz cars. In addition the facility will also provide free pick and drop services across the state. There is a separate driver and customer lounge with TV and WIFi access, quick service, variety of accessories and merchandise to choose from.
The architectural concepts of the facility uses angular design which imitates the brands dynamic silhouette. The overall angular design communicates the presence of rectangular form for a sensual appeal to give every customer a good time.
According to Akash Khaunte, managing director, Counto Motors, the showroom with its convenient location, 53 professionally trained staff and contemporary architecture will “assure a world-class brand experience for discerning customers. “ He said that, the showroom will cater to not only Goa but also neighbouring districts.” The Mercedes showroom of Counto Motors joins the list of 25 other 3S showrooms in India (in all there are 86 stores). Counto Motors is shifting its dealership from Porvorim to the new showroom in Kadamba plateau.