Chapter III of TopGear India and Exhibit’s weekly online conclaves, held on May 08 was a rather special one. In what is an industry first, the conclave had the Managing Directors of Mercedes-Benz India, Audi India, Volvo Car India and Ducati India convene to discuss the way forward for the luxury automobile segment in India. With most manufacturers beginning to resume business, luxury automobile manufacturers are looking forward to getting back to business as well. But the road ahead is a challenging one, given the concerns and current negative sentiments in the market. So what do these manufacturers plan on doing? Read on to know – we had an interesting time chatting with these gentlemen, who certainly had a good time chatting with us – and each other – discussing various things, apart from business as well!
Panelists: Martin Schwenk, MD and CEO, Mercedes-Benz India, Balbir Singh Dhillon, Head, Audi India, Charles Frump, MD, Volvo Car India and Bipul Chandra, MD, Ducati India
Moderator: Ramesh Somani, Chief Editor and Publisher, BBC TopGear India and Exhibit
[Ramesh Somani]: At the start of 2020, Mercedes-Benz India announced 10 new launches. Are your plans still on track or will you need to rework launch strategies now?
[Martin Schwenk]: At the beginning of the year nobody could foresee what is happening now, but we have lined up our product launches and we will continue through the year. We have not changed our launch plans per se, but there could be some delays here and there. With the lockdown there is some impact on production and subsequently on the launches as well, but we are talking about a few weeks or maybe a month.
[Ramesh Somani]: Do you think the Government giving some initiatives, like lower GST on luxury cars, could help boost sales and aid market recovery?
[Balbir Singh Dhillon]: Absolutely yes, I think all of us have been speaking about this for a very long time. I think GST is one of the topics – there are multiple ways how the government can help. At this point in time we need to grow the market. The luxury segment in India is just over one percent, and growing this has been our objectives for a few years now. GST is just one of the topics how the Government can help us increase market share.
[Ramesh Somani]: Any new customer-centric initiatives that you would be looking at this year?
[Charles Frump]: In this changed situation, you have to look through the eyes of the customer and gauge how has their reality changed. We have introduced a Volvo Contactless sales platform which allows customers to purchase their cars limiting their amount of contact with external entities.
[Ramesh Somani]: Italy has been the worst hit by COVID-19. Has that affected the operations in India?
[Bipul Chandra]: Italy is one of the hardest-hit countries, and the region we come from, Northern Italy, that’s the hardest hit within Italy itself. It has definitely affected our plans for this year but last week we started production at the Borgo Panigale factory as the government has given us certain approvals. Now following the rules and regulations of local government authorities we have started production and it is helping us get back on track.
[Ramesh Somani]: How difficult will it be to bring back customers to luxury car showrooms?
[Martin Schwenk]: The first priority remains our customers stay safe, our employees stay safe. Then we need to create some positive momentum. It will all depend on how long the lockdown will continue but eventually people will want to venture out of their homes again and have some experiences. This means they will look into our products especially if the products are attractive and suit customer needs. It will take a little longer, but overall we have reasons to be optimistic.
[Balbir Singh Dhillon]: Most of our customers are from the business community. They own businesses and everything is currently standstill, there is no cash flow. So once people go back to their businesses they will look at how to bring things back on track. Buying will take a little bit of backseat at this point in time but you need to factor that people would immediately not be able to use flights or trains for transportation and cars would be a way people would gratify themselves.
[Bipul Chandra]: Superbikes are one of the best ways to gratify oneself. These are the toys of grown-ups and in today’s time when we say we need to follow social distancing, getting on to a bike and escaping into the wilderness is a great way to do it. So yes it will take time, but customers will start coming back for our products.
[Ramesh Somani]: Any book or show that you have watched – motivational or inspirational, during this lockdown period?
[Balbir Singh Dhillon]: The number of hours we are working right now is more than what it used to be before and we are selling no cars. It’s a very peculiar situation and earlier when there used to be a meeting I could go in a little late. But now with Skype meetings, everyone has to be present on time. That said, I’m still getting some extra time to spend with my family and read as well, the current book I am reading is ‘Good to Great’ by James Collins.
[Martin Schwenk]: At the moment I am reading some detective stories by Deon Meyer, it brings back scenic memories from when I was in South Africa.
[Charles Frump]: I have been spending quite some time meditating – little bit of yoga as well. This is definitely one of the benefits of being in India.
[Bipul Chandra]: I’m currently taking time to understand our roots whilst reading ‘Sapiens: A Brief History of Humankind’
[Ramesh Somani]: Globally, leasing is very big. But in India, leasing has never taken up. Do you think now people will demand more leasing options, especially in the luxury car segment?
[Charles Frump]: For Indian customers, to own rather than rent is very important. This has really driven the long term trends. It could probably pick up the pace when EVs come into the picture when things like battery life would be something that customers will have to factor in.
[Balbir Singh Dhillon]: It’s the full cycle that should be considered. At the end of the leasing agreement there are options to put the car in the second-hand markets, which are very organized especially in countries like Europe. In India, the luxury used car market still needs a lot of structuring to be able to look into leasing options.
[Ramesh Somani]: We are going to launch a poll for the audience – Would you buy a car or rather lease it?
[Ramesh Somani]: So here are the results. We have 24 percent people who think leasing is better and easier, 60 percent would prefer owning a vehicle and 16 percent say they will wait for the economy to stabilize before buying a new car.
[Ramesh Somani]: Do you think the high-end superbike segment would face more challenges?
[Bipul Chandra]: Our customers are very established people, we make and sell bike for different purposes. A person who is into this riding culture would not stop. If there is a ride to Spiti or Leh-Ladakh or the Western Ghats these enthusiastic owners will make sure they attend these rides and enjoy the thrill and adventure.
[Ramesh Somani]: What are the three immediate priorities that Mercedes-Benz would be taking post the lockdown?
[Martin Schwenk]: The first priority is to re-start production safely and we have integrated a lot of protocols and dealers have been instructed to maintain safety and social distancing. Everything is in place. It is also important that our service business can begin functioning, which means any parts that are required for replacement or supporting the customers are available. The third priority is to get the sales momentum back, and we have to work with our dealers and discuss what kind of offerings we have to launch.
[Ramesh Somani]: Thank you, gentlemen! We are ending this on a positive note, things will go back to normal – it’s not the end of the world.