India could be one of the top 10 markets for Mercedes Benz by 2020
Ola Kallenius, member of the divisional board of Mercedes-Benz Cars, who is responsible for its marketing and sales, and Eberhard Kern, MD & CEO, Mercedes-Benz India, are bullish about the company’s prospects in the country
Q: 2013 was a very good year for Mercedes-Benz as it achieved record sales. What do you think has been working for the company?
Kallenius: It has been a combination of things. We are in the middle of a product offensive and we have a whole range of new products. So if you look at the S class, we are growing and expanding and renewing our traditional portfolio; but the gamechanger has also been the launch of compact luxury cars, the A Class, B Class and showing here today the CLA and the GLA with a very sporty design, modern and exciting models appealing to younger audiences. It is like a stepping stone into the Mercedes-Benz brand for many people who may have been dreaming about the brand but it was out of reach. The brand desirability with the product portfolio is fuelling the success.
Q: How tough or easy was to build the brand desirability. A lot of people believe that at some point Mercedes had become a ‘dad’s car’ kind of a brand?
Kallenius: Mercedes has always been a forward looking brand. If you go all the way back, we were the founding fathers of the automobile. Segmentation-wise, though, you start with the C Class in India and then go upwards; so clearly, because of the price range, it is not your first car when you were 25. So I think it is more a segmentation and price issue. We had the B Class before but they were more functional kind of vehicles. But when we focussed on the design side, it made a radical change. It felt like an explosion of new customers coming into the brand. For instance, the CLA was introduced below the C Class in the US and we have had 82 percent conquest rate. This is unbelievable because normally if you have 50 percent conquest rate, it is considered very good. So there is a pent-up demand that can now be realised.
Q: China has emerged as a huge market. So let’s say your China as well as India heads make a case for higher allocation, how would you choose which market to concentrate more on?
Kallenius: It is not an either-or discussion. India from a volume point of view is lesser than China, but from an economic point of view, the long-term potential is great. As a matter of fact, Kern was presenting to the board a few weeks ago and we believe that the Indian market can double its size by 2020. We believe the premium segment will grow disproportionately. So our average prediction is that we should be able to do double digit growth by 2020. If Eberhard had to actually deliver on that promise, India would jump into the top 10 markets for Mercedes-Benz by 2020. There is both excitement and pressure to exploit this opportunity. But it takes two to tango. So we will deliver the products to make it possible.
Q: Mr Kern, how did the strategy presentation [to the board three weeks ago] go?
Kern: It went very well. There is a lot of backing from the headquarters. So, we are expanding our production capacity as you know and we are bringing in more models. But when it comes to allocation, we are still short.
Kallenius: Yes, everybody says give me more, which is a good situation to be in.
Kern: Yes, the allocation is getting better. But what I can say is that our growth in January is even higher than what we did in 2013. And last year was very good for us.
Q: Carmakers are taking sides on a particular technology, be it electric, hybrid or fuel cells. What is the strategy for Mercedes Benz there?
Kallenius: The road towards emission-free riding is not a one-horse race. In my analogy, you need different horses. That’s why we have a broad portfolio. Obviously on the combustion engine side, we are at the forefront of technology. But we are coupling that with fully electric vehicles, the smart e-drive, B Class electric drive. We have some of the first fuel cell cars in the market, we have launched a range of hybrids and we continue to do that. So we have decided to put our eggs in several baskets.
Q: Mr Kallenius, you were with AMG [the high-performance tuning division of Mercedes-Benz] before this, are you enjoying your job in marketing?
Kallenius: AMG was a dream come true for a car lover. I thoroughly enjoyed my years there. But marketing and sales is a natural extension of that role. And the ability to work with markets around the world with our product portfolio is exciting. I am happy and looking forward to the next years in marketing and sales.
