He’s the man who has been steering the Indian arm of Mercedes-Benz for the past five years. In an Exclusive with B&E, Dr. Wilfried Aulbur, CEO & MD, Mercedes-Benz shares where the company is heading
B&E: Mercedes-Benz is looking at entering tier I and tier II cities. How do you plan to go ahead with it?
WA: I don’t want to comment on investments. But as far as implementation is concerned, we basically have different formats for different cities. We typically start in a city with authorised service center which primarily is a place where customers can get the basic maintenance done. Then comes the ‘Auto House’ which houses vehicles anywhere between 100 and 1,000, depending on the location. Investments are made based on sales forecast for a particular region. For instance, we are building a brand center at Mathura road in Delhi where we will showcase 26 cars and which will have an ‘AMG Experience Vehicle Area’, a structure that will not only make a statement in that region but in India as a whole.
B&E: With a gamut of luxury car makers like BMW, Audi, et al, having set foot in India, what has been your focus & strategy to fight competition?
WA: Our core focus has been value for money. This is the reason we haven’t decontented our offerings. Further, we have not gone into overly aggressive discounting because at the end of the day we believe that the luxury car buyer is looking for an experience and is willing to pay the money for that. In fact, the strategy has paid off well and we have a very good bottomline. Going forward, we plan to continue along these lines.
B&E: Audi and BMW entered the Indian market 4-5 years ago and they have successfully been able to eat a considerable portion of the luxury car pie. How has this affected Mercedes-Benz?
WA: Competition has increased but then that’s market dynamics. In a market brimming with opportunities, redistribution of market share is actually healthy. If you look at markets such as Brazil, China or Russia you’ll observe similar scenarios where luxury car brands have divided the market among themselves. We are growing very significantly in China and have sold more than 1,00,000 vehicles within the first nine months of this year. This means that over 10% of our overall global sales is coming from China. While 22% comes from US, about 45% of the total global sales comes from Europe and other western countries.
B&E: How important is the Indian market for Daimler AG?
WA: As of now India is just 1%. However, 10 years down the line we will achieve the same size as that in the United Kingdom. But, at the end of day the market share that we are talking about is very small in terms of volume.
B&E: To what extent does Mercedes-Benz rely on local manufacturing?
WA: As compared to other luxury automobile manufacturers, we derive the highest degree of local value addition. For the C-class and E-class we have local body shops which takes care of the paint job. We also have assembly lines for the E-class. In fact, this flexible manufacturing setup with limited investment gives us the advantage to produce more variants and churn out larger volumes.
B&E: The road ahead for Daimler AG in India...
WA: Daimler has already made huge investments in India. We have recently announced an investment of over Rs.3 billion. In fact, with growth opportunities, investments are gradually moving up. Human resources at Bangalore have also been ramped up from 200 to about 600 employees. There are no specific plans as far as investments are concerned, but considering the overall landscape, we are definitely at par with competition in the industry.
WA: I don’t want to comment on investments. But as far as implementation is concerned, we basically have different formats for different cities. We typically start in a city with authorised service center which primarily is a place where customers can get the basic maintenance done. Then comes the ‘Auto House’ which houses vehicles anywhere between 100 and 1,000, depending on the location. Investments are made based on sales forecast for a particular region. For instance, we are building a brand center at Mathura road in Delhi where we will showcase 26 cars and which will have an ‘AMG Experience Vehicle Area’, a structure that will not only make a statement in that region but in India as a whole.
B&E: With a gamut of luxury car makers like BMW, Audi, et al, having set foot in India, what has been your focus & strategy to fight competition?
WA: Our core focus has been value for money. This is the reason we haven’t decontented our offerings. Further, we have not gone into overly aggressive discounting because at the end of the day we believe that the luxury car buyer is looking for an experience and is willing to pay the money for that. In fact, the strategy has paid off well and we have a very good bottomline. Going forward, we plan to continue along these lines.
B&E: Audi and BMW entered the Indian market 4-5 years ago and they have successfully been able to eat a considerable portion of the luxury car pie. How has this affected Mercedes-Benz?
WA: Competition has increased but then that’s market dynamics. In a market brimming with opportunities, redistribution of market share is actually healthy. If you look at markets such as Brazil, China or Russia you’ll observe similar scenarios where luxury car brands have divided the market among themselves. We are growing very significantly in China and have sold more than 1,00,000 vehicles within the first nine months of this year. This means that over 10% of our overall global sales is coming from China. While 22% comes from US, about 45% of the total global sales comes from Europe and other western countries.
B&E: How important is the Indian market for Daimler AG?
WA: As of now India is just 1%. However, 10 years down the line we will achieve the same size as that in the United Kingdom. But, at the end of day the market share that we are talking about is very small in terms of volume.
B&E: To what extent does Mercedes-Benz rely on local manufacturing?
WA: As compared to other luxury automobile manufacturers, we derive the highest degree of local value addition. For the C-class and E-class we have local body shops which takes care of the paint job. We also have assembly lines for the E-class. In fact, this flexible manufacturing setup with limited investment gives us the advantage to produce more variants and churn out larger volumes.
B&E: The road ahead for Daimler AG in India...
WA: Daimler has already made huge investments in India. We have recently announced an investment of over Rs.3 billion. In fact, with growth opportunities, investments are gradually moving up. Human resources at Bangalore have also been ramped up from 200 to about 600 employees. There are no specific plans as far as investments are concerned, but considering the overall landscape, we are definitely at par with competition in the industry.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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