With around 8,000 units apart from its closest competitor Turkey, India promises to become one among the Top 3 overseas Mercedes-Benz markets globally in the next 2-3 years, with robust macroeconomics driving growth.
05 Mar 2024 | 9775 Views | By Mayank Dhingra
With cumulative annual volumes crossing 17,000 units in CY23, India has become the fifth-largest overseas market for German luxury carmaker Mercedes-Benz, which is bullish about India's potential in the coming years.
The company envisions India climbing up the pecking order, and being among the Top 3 'overseas' markets in ...
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With cumulative annual volumes crossing 17,000 units in CY23, India has become the fifth-largest overseas market for German luxury carmaker Mercedes-Benz, which is bullish about India's potential in the coming years.
The company envisions India climbing up the pecking order, and being among the Top 3 'overseas' markets in its current global tally - Japan, Korea, Australia, and Turkey - a total of 118 countries that are driving strong growth, beyond its three main developed regions - China, Europe, and the US.
“India plays a key and strategic role for Mercedes-Benz, globally. Over the next two-three years, we anticipate India to be among the Top 3 overseas markets, thereby contributing significantly to the overall Mercedes-Benz business,” Sagree Sardien, Head of Region Overseas, Mercedes-Benz Cars, told journalists in New Delhi, on her first visit to the country.
Sardien further added that the company sees strong potential in India's luxury car segment, particularly the top-end vehicle (TEV) category - cars priced over Rs 1.5 crore - which has been reporting double-digit growth for Mercedes-Benz in the recent few years. Mercedes-Benz India's TEV sales contribution was pegged at over 25 percent of its total volumes in the country in CY23, and as per Sardien, “This trend will continue in CY24 and beyond.”
“Therefore, the potential for India, and what we could bring to the market is limitless. Having said that, we need to have a lot of resilience and patience to observe this behavior from the market, and this has been very evident over the last few years. We have always believed that India is a market of strategic relevance, and we will continue to believe that,” she said.
The company revealed that while it is observing macroeconomic headwinds in several markets, India remains a strong market for Mercedes-Benz in the near term- a time frame of 3-4 years. To fulfil its ambitions, the company is looking to tap into the growth opportunity in India's Tier 2 and Tier 3 markets, which are likely to fuel higher growth compared to urban centres in the coming years. “We see India's growth coming from Tier 2 and Tier 3 markets, and hence, we are convinced that focusing on these regions makes sense to tap into the opportunity to expand and fill the white spots,” Sardien pointed out.
As a result, Mercedes-Benz India aims to venture into 10 new cities, including the likes of Jammu, Vapi, Kottayam, among others, and set up 20 new touch points in CY24, with an intent to bring more customers into the Mercedes-Benz fold, as well as be closer to the customers by reducing their travel time to an outlet to less than 2 hours. Furthermore, with the changeover to its direct-to-customer retail format - Retail of the Future - the company says the strategy has allowed it to offer the right consumer experience, and makes it even more optimistic for growth in the coming future.
Mercedes-Benz also envisions India’s luxury car market to grow multifold in the next 5-6 years, to achieve a 100,000-unit market size by 2030. “By the close of this decade, we would anticipate the Indian market scaling to 100,000 units, and therefore, we must have the right investments, products, and retail format to grow our business. Therefore, we are paving the way towards this goal; we need to be patient to see the results,” Sardien mentioned.
“When I compare India to other countries, I do not see differences in regulations and policies, and therefore, these are not the factors hindering the growth of the luxury car market in the country. Rather, India is one of those emerging markets with a strong growth potential,” she added.
While EV sales presently contribute to about 4 percent of Mercedes-Benz India's total volumes, the company believes that the adoption has been “much slower” compared to the expectations, owing to several factors, including technology awareness, range anxiety, and charging infrastructure.
“Therefore, we will go according to the transformation of our customers. While we will not change the broader strategic direction as it is clear that the future for us is electric, we will proceed with the market dynamics based on consumer preferences and trends. Whilst we are at 4% in EV penetration in India, we anticipate double-digit penetration in EVs going forward,” Sardien said.
While Mercedes-Benz India presently has three all-electric models - EQB, EQE, and EQS, the company plans to introduce three new EV models, including the all-electric Maybach in India in CY24, and says the model will define the pinnacle standard in electrification in the market.