Younger, upbeat Mercedes gears up for India

Eberhard Kern moved to India 16 months ago and continues to be amazed by its sheer diversity. And for the Managing Director & CEO of Mercedes-Benz, it is this aspect about the country that promises tremendous growth prospects for the future.

As he puts it, India is not like other parts of the world which have one dominant city or area. For instance, in Russia where Kern worked for five years, Moscow took up two-thirds of Mercedes’ business. And during his three-year stint in Taiwan, it was Taipei which accounted for 60 per cent.

This is not the case in India where Delhi and Mumbai constitute 40 per cent of the company’s sales with the balance coming from other regions. It is this decentralisation, which Kern believes, has a “good influence” on strategy especially when it comes to planning the company’s retail network. “You need to be balanced and close to your customer,” he reasons.

Little wonder then that Kern is all excited about the road ahead for Mercedes in India. “There is no other country where you deal with marketing and PR in more than 20 different languages. In which other country do you have a different price for your product across cities due to the local taxation structure?” he asks excitedly.

And while this could be an issue for some automakers, the Mercedes CEO sees it as a challenge and huge opportunity. This is why he insists that India is more on the lines of Europe where there is a single currency, different languages and taxation levies along with independent and competent state governments. “The only difference is that India has more people,” he says good-naturedly.

Kern has been particularly struck by the different attitudes across regions. For instance, people in the south tend to be understated, a trait he can quickly connect with his own roots in south Germany where the tendency is to be low-key. On the other hand, the northern part of India is characterised by greater outspokenness and all these individual traits play out in the decision to buy a car.

Kern came to India at a time when energy levels in the Mercedes-Benz ecosystem seemed to be on the wane. “We had had a flat 2012 and the brand itself was not seen as being progressive or young enough,” he recalls. While Mercedes is targeted at people who have arrived in life, there are others who are on the way to doing so and it is this customer base that opts for other brands.

“The fact that you have to arrive in life and attain some maturity to go for Mercedes is a good thing. It has helped us build our buyer base but we realised we had to open up a bit more in being younger, progressive and more sporty,” Kern admits.

This is precisely what he and his team focused on and this lead to the creation of an action plan in 2013, termed the Year of Offensive.

The pillars around this strategy were product, network, cost of ownership and, most importantly, the brand experience. It was in this endeavour to get the brand refreshed that resulted in launches like the new E-class, the new S-Class, E63 AMG and the SLK 55 AMG.

“We are now getting more customers into the Mercedes-Benz family and younger ones too with a drop in the average age, a delighted Kern says. By the end of the day, it boils down to retaining the loyal customers but opening the brand to new ones who have not experienced Mercedes.

The strategy worked wonders in 2013 where sales grew by 32 per cent to over 9,000 units and at a time when the market was not in the best of shape. Better still, the company outpaced its traditional rivals (BMW and Audi) and this calendar has been positioned as the Year of Excellence where the momentum is expected to continue.

“It is not about words but the bigger task on hand is to create a new mindset. The goal is to give our team and dealers a clear direction to set the boundaries with defined pillars to focus on,” Kern says.

From his point of view, the priority is to ensure the best customer experience as “number games are of no interest”. It is eventually about being profitable and sustainable and not “short-term thinking of being ahead of rivals”.

Kern insists that the most convincing argument for Mercedes is for potential buyers to go for a test drive, especially for those who have had an accident and are not keen on an encore. “The core of the brand stays the same wherever you are in the world. If you ask people what Mercedes is about, the responses will dwell on quality, safety and reliability,” he says. And it is no secret that even a kid knows the brand association with the 3-pointed star.

Yet, Kern is quick to add that this does not mean that “we are always the best” and that it is particularly important not to “have the slightest touch of arrogance”. After all, these are tough times for the industry with no immediate signs of a revival in sight. “We have a strong and committed team which has managed to write a true success story and keeps pushing hard,” he says.

Mercedes has also evolved from being a hardcore German/European brand to becoming more global. Its top markets include the US and China with many more coming up, a list which includes Japan, Russia, Korea and Taiwan.

Brazil is a bigger market for the company’s trucks and buses while its luxury car market is still low like India’s. Yet, all this could change in the coming years as disposable income levels increase to keep pace with people’s aspiration levels.