New Mercedes-Benz CEO big on local assembly, new products

Roland Folger recently took charge as the Managing Director and CEO of Mercedes-Benz India after having helmed of the carmaker’s Malaysia operations for over four years. Handing him the reins was Eberhard Kern, who was instrumental in doubling the sales of the company in India during his stint. Folger has taken charge at a time when Mercedes- Benz India is not only in the leadership position, but also when the luxury car segment in the country is expanding.

So how does Folger plan to apply the learning and strategies from the Malaysian market, where Mercedes had around 50 percent market share, in India? In an exclusive interview with Autocar India, Roland Folger said, “When I started (in Malaysia), our market share was around 38 percent. In Malaysia, the biggest contributor to the overall growth was – and I’m very happy to see this happening in India already before I start – that you need to ensure the factory has capacity and has products available, which basically mirrors our commitment to the local market with our local manufacturing direction here.”

“Adding new products is also a significant driver of volume for us. That’s what I bring from Malaysia as well because we introduced completely new models, hybrid models in the case of Malaysia, which has never been there before. I have no idea yet about how hybrid models will work in context of India though…,” he added.

In June 2015, Mercedes-Benz announced the addition of a new production line at its Chakan plant in Pune to double its annual capacity to 20,000 units, up from 10,000 units earlier. The expansion is a clear indicator that demand for luxury cars in India is on a rise and Mercedes-Benz India wants to be prepared for the same.

Folger also stressed on the need to have a strong dealer network and trained personnel in order to have a successful business. “The second leg to cementing our success story would be our dealer network. And what I have seen so far, in terms of the numbers is that we are going in the right direction. We definitely have the process in place to support them, which includes training, selecting the right people,” he said. With a total of 12 new outlets inaugurated in the period of Jan-Sep 2015, Mercedes boasts of the densest network presence for any luxury car maker at 80 outlets in 39 cities.  

Besides, Mercedes has kept strong focus on localisation in India. In fact, almost nine out of ten cars sold in India are locally assembled. The carmaker believes local assembly of cars is key to become successful in the luxury car business. “Local manufacturing is absolutely the key to success in the luxury car business in India, given the Indian tax and duty framework. There’s no other way. And we produce almost 9 out of 10 cars we sell, locally. I do not have exact figures but it’s coming into that direction…Maybe a bit less than 9 or 10 today,” according to Eberhard Kern, outgoing MD and CEO of Mercedes-Benz India.

The carmaker recently announced plans to locally assemble the CLA sedan (petrol and diesel) as well as the petrol GLA SUV at the company's Chakan plant. The former will become the company’s seventh model to be locally assembled after the C-class, the E-class, the S-class, the M-class, GL-class and the GLA-class.

The strategy has clearly paid off for the German carmaker, as it boosted sales in the Jan-Sep period to a record 10,079 units – a few hundred units shy of the entire 2014 sales volume (10,201 units). It looks amply prepared to unseat key rival Audi in terms of yearly sales by end-2015.