In conversation with Matthias Luehrs, Mercedes-Benz Cars

On the sidelines of Auto Expo 2018, Matthias Luehrs talks to Autocar India about the next-generation of compact cars, the possibility of introducing a BS-VI-compliant four-cylinder diesel ahead of the 2020 deadline, and gives an outlook into hybrid and electric vehicles in India.

Although the Indian market has done well in terms of numbers, it’s still pretty small compared to other markets, especially China. What is your growth outlook?
The Indian market has grown 50 percent over the last three years and our sales have more than doubled over the last five years. So, growth has been substantial. In the last few years, India has been a fast-growing market and also one of the emerging markets for us. Therefore, we see further growth in both the overall market as well as in the luxury market for the coming years. Comparing the Indian market with the Chinese market wouldn't be ideal. We grew 26 percent in China last year and 16 percent in India. But you can’t generally compare one market with the other one since every market is different in terms of political environments, spending habits, etc.

Your compact cars such as the A- and B-class have not performed as per expectations. Do we expect a certain focus on this category when you have the new-gen models coming in?Globally, we are very satisfied with the sales figures of our compact cars. In 2017, almost every fourth vehicle sold at Mercedes-Benz was a compact car. For India, among the cars with front-wheel-drive architecture, the CLA and the GLA, which are also locally assembled here, are doing well. The A-class is a premium hatchback and it is at the end of the lifecycle, that’s why the response in the Indian market hasn't been that good. But we are confident that the A-class sedan has potential in this market.

Strategically, is the compact car segment important?
I wouldn’t say compact cars are a bigger focus area than the other segments. At the moment, SUVs are the fastest growing segment for us worldwide as well as in India. But we are always looking into compact cars, because they contributed significantly to rejuvenating the Mercedes-Benz brand and changing its image, therefore it is a strategically important segment.

Does the scale give you the confidence of Indianising products a bit more? Not in terms of components, but in terms of design. For instance, in terms of seat configuration, or a spare wheel, maybe even sheet metal changes.  
We constantly review our portfolio offerings for all markets and make adjustments to meet customer needs, especially for important markets like China and India. A good example is the E-class long wheelbase that we introduced in India last year. With a growth of more than 60 percent, it was our bestselling model. However, we have come to the conclusion that there is currently no need to change the sheet metal or major components of our existing cars.  

India seems to be one of the few very diesel-focused markets in Asia-Pacific. So do you feel that it is going to be more of a petrol future? Of course, SUVs will want diesel, but what is the sense you get on powertrain demand?
We are still developing our internal combustion engines, petrol as well as diesel. Recently, we introduced very advanced diesel engines, as you know. And, currently, we are introducing the BS-VI in India. Globally, it is available in both the four-cylinder OM 654 and the six-cylinder OM 656. Here, in India, they want the OM 656. So the strategy is to develop and to invest in diesel and to further improve this technology. We are doing the same for petrol engines as well. Other aspects are plug-in hybrid and the 48-volt technology where we are investing a lot of money in. By 2022 we will electrify the entire Mercedes portfolio.

Will the OM 654 also be made BSVI-compliant before the deadline?
You could see a transition before the deadline. We are technologically advanced in diesel technology and we will continue to invest in modern diesel technology to cater to the demand of customers in India.

Will plug-in hybrids be available in India as well?
Globally, we will offer at least one electrified vehicle in each model series by 2022. This means that we will offer our customers at least one electric alternative for every Mercedes model series – from compact cars to large SUVs. We plan to have more than 50 electric vehicle variants in the market. But the question is if the infrastructure is present and if the customer demands electrified vehicles. 2022 is still four years away, but it is a long way to get the infrastructure in India ready and that’s important to generate customer demand. Nevertheless, we are preparing our network and we will be ready to deliver when the market opens up.

What about electric vehicles?
Electric vehicles are the third part of our three-pronged strategy which includes internal combustion engines and plug-in hybrids. We will have more than 10 fully electric passenger cars in the market by 2022. We have to bring in EVs according to the market size, so the future for EVs in India also depends on the infrastructure and customer demand.

Do you feel it is unfortunate the way diesel has been singled out as the devil of pollution in India?
I think, in the present day, the discussion about diesel is very emotional and not always on a rational basis. However, we have made huge advancements in diesel technology with our latest engine family.