The person who made Mercedes Benz the highest promoting luxurious automobile maker in India, Auto Information, DFL
The India head of Mercedes-Benz, Roland Folger has a legitimate criticism. Since 2015, when the 58-year-old took over the corporate’s India reins and shifted to Pune, he has been denied the pleasure of driving. “As a company policy, I am not allowed to drive here.” The rationale being that poor self-discipline on Indian roads may be tough to take care of. For the German, used to autobahns with a velocity restrict of 130 kmph, India’s chaotic and congested roads are an image in distinction. “Even in a city like Pune, things have turned for the worse. There is chaos of an unimaginable level,” he says.
Folger, nonetheless, has had the pleasure of one other journey: of constructing Mercedes-Benz the biggest promoting luxurious automobile maker in India.
This decade started on a nasty observe for Mercedes-Benz India Ltd (MBIL), which first misplaced the long-held crown to BMW. By 2012, Audi — a part of Volkswagen Group — had pushed it right down to the third slot. However MBIL returned to pole place by 2015. It has additionally turn out to be the world’s largest promoting luxurious automobile maker. Right this moment, the corporate with the slogan “The best or nothing” leads the luxurious automobile market in India by an enormous margin.
Folger is now packing his luggage. Come October, he’ll shift base to Thailand as head of Mercedes-Benz operations in Thailand and Vietnam. “Going to Thailand is like closing the circle.” Within the 1980s, he first moved to Bangkok to take cost of a components’ organisation of Daimler Group. “I have very fond memories of that place. My wife visited me there. We weren’t married then,” he remembers. He now has three kids – daughters aged 27 and 21 and a 25-year-old son — who’re primarily based in Germany.
There’s another excuse why Folger is wanting ahead to the Thailand stint. In contrast to India, which has been tentative about its electrical car (EV) push, “Thailand is moving distinctly towards EVs,” he says. It’s going to provide a superb studying curve.
Sitting in his expansive nook workplace, situated inside MBIL’s 100-acre plant in Chakan close to Pune, Folger finds time to replicate on his India stint, although his schedule is full of journey plans and a number of farewell dinners. “It is hard to say goodbye. My wife and I have made a lot of friends. We had a great time here.” These fond reminiscences are constructed on some strong enterprise efficiency in India.
India can shock you in some ways, says Folger, recalling an incident in his early days. He was inaugurating a dealership in Dehradun when a buyer informed him: “You have to promise that you will stay and not close down soon.” Folger was shocked by the request. However he quickly found the rationale for the request. Many luxurious automobile makers opened showrooms in tier-2 and tier-Three cities however quickly shut these down on account of viability points. This left prospects in a lurch. Folger learnt his first India lesson then — prioritise after-sales service over gross sales. “A customer can drive a long distance to buy a car. But he expects after-sales service to be easily accessible.”
India was merely a microcosm of Mercedes’ international woes when Folger arrived right here. Round 2011, Mercedes-Benz was dealing with a number of challenges. Other than dropping market share to BMW and Audi, the corporate was seen as a luxurious automobile maker for outdated males. The product pipeline was uninspiring and the cool issue to lure millennials was lacking. However MBIL was capable of race again to the pole place due to a mixture of worldwide and India-specific initiatives.
Folger borrowed closely from the worldwide turnaround technique however added sufficient India-specific initiatives, too. Portfolio revamp was probably the most essential step. His three-year tenure noticed 30 mannequin launches. MBIL launched new-generation entry-level fashions A, B, GLC and CLA to woo youthful patrons. He calls the native manufacturing of long-wheelbase E-Class (its best-selling mannequin at present) as a sport changer. The corporate additionally launched the right-hand drive SUV GLC in India.
“Globally,” says Felipe Munoz, international automotive analyst at JATO Dynamics, “Mercedes’ new sporty young design brought back the cool factor to the brand.”
New dealerships and a differentiated customer support fortified MBIL’s technique. Dealerships have risen from 78 in 2015 to 93 now. Specializing in service as a differentiator, it launched “service on wheels” — service vehicles with instruments and spares to take care of automobiles in areas the place MBIL doesn’t have a direct presence. It rolled out service packages of as much as 10 years to decrease possession price. The service packages helped E-Class turn out to be its best-selling mannequin. “While our new E-Class is more expensive by 10-12% on paper, in real terms, it works out cheaper with these packages,” says Folger. Half of the E-Class bought now are underneath this bundle.
Organisational overhauls had been additionally rolled out. Earlier, “left hand didn’t know what the right hand was doing”. Dealership promoters have been requested to nominate devoted CEOs to enhance administration. Efforts have been made to expedite choice making.
The technique appears to have labored. When the products and companies tax charges had been introduced in Might 2017, the MBIL crew labored out the revised charges inside 4 days. “In the past, it could have taken a month,” says Folger. MBIL at present leads with a 39% market share. Most significantly, the common age of a Mercedes purchaser has come down from 45-plus to 37.
Rakesh Batra, associate (automotive), EY India, says: “MBIL has made significant investments in manufacturing localisation, product range, sales network and differentiated service, which has enabled their prime position.”
Folger’s India journey had began with some massive bumps. Quickly after he took cost, the federal government banned diesel autos. An upset Folger spoke about Germany stalling investments. The auto business was hit by a diesel tax, luxurious cess and myriad coverage flip-flops. Folger has since recovered his German poise: “We see this as a market with a lot of potential. We are trying to figure out how best to grow here.”
MBIL is now laying out its 2020 technique with a thrust on qualitative development — growing revenues with out including price. Additionally it is making ready for rising competitors and shifting business panorama. Volvo and JLR are rising and can slice the market in a number of methods, says Deepesh Rathore, director, Rising Markets Automotive Advisors.
“We do not disregard anybody as a competitor,” says Folger. However he sees a basic distinction in strategy. “The Japanese have formed joint ventures with local partners to build a local network. But I don’t think that is a guarantee for success.”
Electrical autos, at present’s buzzword, don’t excite Folger. “EVs are overrated. The world has too high hopes from EVs.” Look past tailpipe emissions and perceive the place and the way electrical energy is being produced. There are not any straightforward solutions — thermal is polluting, nuclear power has critical security implications. To prime it off, EV charging infrastructure is dear however a essential prerequisite. “Now the Indian government is again talking about EVs in just top 10 polluting cities. That may be a better way to look at issues,” he says.
To hedge all dangers, Mercedes is betting on a three-pronged technique — enhance its inside combustion engine expertise, develop plug-in hybrids and make full-fledged EVs. It expects to have 10 EVs by 2022. “India has gone back and forth on its EV policy. China is rushing towards EVs faster than any other country. There are strategic thoughts behind it. China found out it could not compete in internal combustion engine technology so is betting big on EVs to get ahead in the race.”
However Folger is optimistic about India. He loves the quick tempo, its younger inhabitants, the emotional power abound, the tradition and heat, and variety. “Unlike the West, where people think what’s in it for me, there is a high level of commitment here without holding back.” He says he hopes the nation preserves its historical past earlier than it’s too late.
He desires the federal government to achieve out to the business extra usually. “We need more dialogues.” As an alternative of five-six ministries, the federal government ought to appoint one particular person for the business. “There are challenges, but opportunities outpace everything else in this country,” he provides.