Santosh Iyer is currently serving as Vice President Sales & Marketing, Mercedes-Benz India. He has been working with the luxury carmaker for over a decade. He has done his Master’s in Business Administration from Fachhochschule Konstanz, Germany and also holds a postgraduate diploma in management and marketing from the University of Indianapolis.
How has the first half of 2021 been for Mercedes-Benz India?
I think the first quarter started on a very good note as we posted a 30% growth in that period. Then we were hit by the second wave like everybody else. So that had a big impact on our products as well as on sales because many of our outlets were closed.
But we still decided that we will go ahead with our product launches and introduction plan as the product brings excitement to the market. And at that point in time, once the cases started coming down, we started taking pre-bookings for the GLS, Maybach, and S-class. The moment we opened up, all these cars were sold out. I think that there was a good pent up demand and good acceptance for our cars.
From a strategic perspective, we are focussed on the product side. On the marketing side, I think there is a big focus on online sales. Even during April and May, our online sales share went up to 30% from 20%. Despite the dynamic time, we were able to communicate with customers online. Of course, people who are not affected, we were selling intuitively by communicating with the customer.
I think the June numbers or the H1 numbers clearly said that there is growth. What's more important is that July also continues is the same trend. And we are able to open with a very good order bank ranging from four to six weeks for A-Class to GLA. Some of the cars are sold out till the end of the year like GLS, and the GLS Maybach and S-Class are on for configuration for January of next year. So there is a very strong demand.
Since the last few launches, we are observing that Mercedes-Benz is trying to sell more cars to ultra-rich and HNIs. Can you please share where the demand is coming from?
Even in the pandemic, the results of corporate India are very strong and we can see the overall debt in corporate India is also coming down. Also, when you look at the stock market, which is doing well, it gives us a sense of future projection.
Basically with corporate India doing well, you can also see the buying sentiments better among the business owners or owners of large industries. So they are going ahead with these purchases of luxury goods.
The second trend we see is that a lot of young guys have come back to India from foreign shores in the age bracket of 40 to 45. They are also going out and buying these ultra-luxury cars. We have seen a similar trend in the past with the launch of GLS Maybach and S-Class, and now with the launch of AMG cars, we are seeing similar groups coming in to buy these cars.
So, the overall sentiment is there and it is reflected in the stock market or luxury car sales. Also, once you look at the other end of the segment such as A class or GLA, even there we see employees and professionals like doctors and lawyers also going out and purchasing these cars. In general, the demand has also come back to pre-COVID levels.
What segment is contributing the most to Mercedes-Benz India sales?
When we look at segment-wise cars, the AMG has grown by three times compared to last year. We are seeing a 200% growth in H1 CY21 over H1 CY20.
In terms of the market, the smaller markets (Tier I and Tier-II) are contributing only 15% of our sales, but that has remained flat. The contribution of these small markets has not grown in the same way. It used to be below 5% in 2015 and has gone up to 12-15%. But now, it's not growing further.
From a geographic composition, nothing has changed the performance. Model-wise, as I said, the AMG did almost three times growth compared to last year.
You have strong product launches lined up for H2 as well. What is your outlook for Mercedes Benz India?
The biggest thing is that the demand side is strong. However, the supply side is challenging, because of the global logistic issues, supply shortage of components such as semiconductors. We are facing challenges there, and that's one big variability we see in H2.
The second one is, of course, the pandemic is still around us. We don't know really, how wave three or anything else will come up, or local lockdowns will be implemented. But we still are very positive and the outlook for H2 is strong double-digit growth.
Do you think India has realised the full potential of these super sports cars?
We don't feel India has realised its potential and that's exactly the reason for launching AMG35 and 43 models. Our strategy is very clear – we will get customers into the AMG brand with the 35 and the 43. The best part of AMG is that it gives you a lot riding along with everyday practicality. So, the moment they start experiencing these high-performance cars, we are sure they will want to upgrade for higher models.