Mercedes Benz has a new growth plan: Focus on smaller cities

  • Sunny Sen, Hindustan Times, New Delhi
  • Updated: Feb 08, 2016 21:14 IST
In 2015, Mercedes opened 15 dealerships but 10 of them were in smaller cities such as Ranchi, Kozhikode and Jamshedpur.

Mercedes might have clawed back to the top spot in India’s luxury car market after three years, but it is not taking the lead for granted.

Most of this is from Mercedes’ learning from the past. The luxury car brand, which is also the oldest compared to Audi and BMW, had stopped resonating with the youth and started being labelled “the old man’s car”. Meanwhile, competition became aggressive and opened dealerships at a speedy pace. Customers too, shifted.

So, Mercedes did two things — made its products more youthcentric and sporty, and then focused on expanding its dealer network. Last year, it opened 15 dealerships, but here is the surprise — 10 of them were in smaller cities such as Ranchi, Jamshedpur and Kozhikode. In 2016, it plans to open up 10 new dealerships, most of them again in smaller cities.

“There are so much white spots available. There are many cities in India where there are Mercedes customers, but we don’t have dealerships there. Our customers travel to nearby cities to get the cars serviced,” said Roland S Folger, CEO and managing director of Mercedes’ India operations. In 2015, while 45% of Mercedes’ sales came from Delhi and Mumbai, 20% also came from smaller cities. A couple years back, this number was in lower single digits.

If the German giant wants its next level of growth to come from these smaller cities it will have to extend its service network capability as well. “There are many cities where people have the money to buy Mercedes cars,” Folger said.

The C-Class entry-level sedan sells the most in India, but what is surprising is that in smaller cities the demand is for the more luxurious models, especially for the E-Class and the S-Class. “These are bought by people who already have the money,” said Folger.

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