The largest luxury carmaker in India, Mercedes-Benz, which will start selling its first electric vehicle in the country in April, plans to launch 10 more electric products in the next two years, says MD and CEO Martin Schwenk.
The German automaker is also aggressively pushing its SUVs in India, which is the fastest-growing segment in the country. Its latest offering, the new GLC Coupe, is locally made and takes the company’s SUV portfolio to the largest in the luxury segment.
However, the auto sector has been reeling under a slowdown for more than a year and fresh concerns have risen from the coronavirus outbreak which threatens to disrupt the supply of components from China. In an interview with Fortune India, MD and CEO Martin Schwenk spoke about the slowdown, the popularity of SUVs, and whether moving to electric makes sense in the luxury segment. Edited excerpts:
When do you see a revival in the auto industry, especially in the luxury segment?
Globally, Mercedes still had a good year but obviously the sentiments are not very high because there are a lot of uncertainties in the economy, and an added impact because of the coronavirus. But nobody really knows how much impact coronavirus will have and for how long. In 2019, we’ve seen a difficult year for the auto industry. And we’ve seen a low point in the August-September time frame. But we’ve seen a very good festive season after that. The fourth quarter was quite strong, especially in India. We saw the momentum building up. So, we are relatively confident that with the expanding portfolio and a lot of new models coming up...it should help us in carrying forward that momentum. The change BS IV to BS VI will still cause irritations. I would think the second half of the year is stronger as the transition phase is passed.
Luxury meets electric. How do you see that segment faring in India with your upcoming launch, the EQC (fully-electric compact luxury SUV)?
In the next two years, there will be 10 electric vehicles. On one hand, we’re working on the product side and on the other, we’re working on market development. We also have an intent to improve the infrastructure. A lot of other brands are also coming up with electric, which triggers the customer. And they ask us—what’s possible in the luxury segment? We see a growing demand.
If you look at our EQC, Which will be available in April for sale, it’s a typical Mercedes but also a fully electric vehicle. We had given some cars to our customers to try, and they were very surprised. On one hand, it’s very familiar and on the other, it’s completely different. We call it sustainable luxury because at the end we didn’t want to create a perception that it’s anything futuristic. First the customers expect it to be a Mercedes but until we have wheels on the road, it’s all theory. It needs to grow on them and us.
How do you decide which electric cars to launch in India, out of a dozen that you have globally?
The Indian customer is different in many aspects. The Indian economy is still very much an investing economy. Indians push for more. With that restlessness, there is also a brand of customers that want to go electric and want more. The question at the end that what exactly do they want is difficult to say. I can't answer today which is exactly the car but I can say that I'm very successful in a C and E class, I don’t see why It should be any different (for India). I don’t see why we won’t be successful in the same car in an electric range. It is something we have to discuss every year. On our volumes, an India-specific product is not feasible and that would also limit us to one model. It might be that we might localise these cars depending on what we expect in volumes.
Every luxury car has a foot in the affordable luxury segment. Are you looking at that segment at all?
Two major vehicles—A-limousine and the GLA for around ₹40-₹43 lakhs—they definitely create an entry price point for the brand and make it affordable. We are also creating a structure in the used car market. You can actually buy certified used cars from our website. Because then you can become a Mercedes owner at a different price point. And if it comes from a trusted e-commerce platform or dealer, you’ll feel comfortable. India is developing and we also need to push ourselves and create a proposition for customers to engage with the brand.
You have four new SUVs coming up. Are you trying to push less of Sedans?
We have two strong legs to stand on. We have a sedan leg with E-class which is our bestselling (model), with C-class A limousine, which we believe will be another part of this because a lot of customers aspire to have a sedan-shaped vehicle. Riding comfort in a c-class or an S class is quite different. But obviously there’s a strong trend towards SUV, even globally in the luxury segment. So, our second leg, the SUV leg is developing and is as strong as the Sedan leg. Our electric SUV is also a sporty SUV. The push on SUV is mostly due to lifecycle. It will definitely be a year which has a strong push towards SUVs. We would cater to all segments—from an electric car to a super sports car, to SUVs, to the limousine. There is something for everyone in the complete portfolio refresh which we have planned this year.
But you’ll continue with your diesel offerings?
We believe that diesel has a strong future, also in India. 75% of our portfolio, specifically in C class, E and S class. Diesel is the engine of choice for many customers. If you compare our engines with similar performances, it’s 20-25% better. Even when it comes to particulate matters, our levels are very close of petrol engines. Our engines undercut massively 50-80% of BS VI.