Mercedes-Benz India’s CEO and MD Martin Schwenk recently kicked off the manufacturing of the company’s first-ever ‘Made in India’ EQS 580, its flagship EV, and claimed it to be the country’s ‘longest-range EV’. He caught up with moneycontrol.com and shared insights on the safety parameters of cars, the role of EVs in mobility, and his estimates for the year’s sales. Edited excerpts:
Q. We had a high-profile and tragic accident recently, involving a Mercedes-Benz SUV, where former Tata Sons boss Cyrus Mistry lost his life. When you ran the forensics and the audits, what did you learn?
A. I cannot comment on the details and specifics, because there are all kinds of privacy protocols. But we had that forensic team from the product liability team from Hong Kong here. And they did review the car. All I can say is that the car did function as designed, including its safety equipment. So, in that sense, it did what it should be doing.
Q. Which meant that all the airbags deployed. Did the crumple zones function as expected?
A: Airbags deploy when they're supposed to deploy. To my knowledge, not all the airbags deployed. But that's all reviewed based on the design of the car and the dynamics that occur in the accident. If you don't have the acceleration or certain lateral forces, then some airbags don’t deploy. What I can say is that the team did not find a concern with the safety systems of the car. All of it worked as designed.
Q. In terms of safety protocols for all of your cars in India, is everything you sell fully specced out to international safety standards, the same as in Vietnam, Paris, Tokyo, Mumbai?
A. Every car has a standard design and a standard set-up. And that's the same across the world. But, of course, you may have some variants that have more features. So, you may have some variants, with differences in that, but the minimum standard across the globe is always the same. And in India, our cars are equally well-equipped as (in) any other country.
Yes, they come through the same tests, there is no difference at all. There is no compromise from the company. I can say that safety is one of the core values of Mercedes for many, many years, actually, for decades. Yeah. And it all goes back to the crumple zone and the steering wheels, the airbags, the ESP, and that's a core value that comes with our cars.
Q. In an environment where road safety is a factor, would you agree that having a safe car is just one pillar? You also need certain types of infrastructure…
A. Of course, the overall system needs to be right. If we stick with the car in the first place, you have the car, you have the driver, and you have two passengers, and all of them have specific roles. The driver is not only driving the car, but he also should make sure that within the car, the behaviour is accordingly safe, because he has the ultimate responsibility of driving the car.
But, of course, everyone is also responsible when they say that they are compliant, and specifically on buckling up. Then, we get obviously into, I mean, infrastructure topics. And also rules and regulations. So, infrastructure plus, say, road behaviour of other participants in the traffic, meaning do they adhere to the code, are all factors on safety.
Q. In the last six months, you have been making a fairly aggressive push on all your top cars and electric vehicles, the EQ range. Why then do they account for less than 1 percent of total car sales in India?
A. We believe that the time is mature and that people will show more and more interest in electric cars. I mean, the interest level has increased over the last three-four years significantly. We have made that prediction that in our portfolio, within five years, we will sell around 25 percent electric cars, of course.
Q. Reports say that in recent times your sales have gone through the roof, and are more profitable than ever before. How do you think 2022 will close for you?
A. In 2022, we aim to have the best ever year. That means we would do around 15,000 plus cars in sales. We have at present 7,000 open orders. In January, we had 3,000 open orders, which means we are getting more orders than we are selling cars. I think we have a very strong market and a very strong product line-up. Overall, even with this supply situation, we should be able to hit, touchwood, the best ever year we have had.
Q. So, once you get close to 100,000 cars will the price become more rational as economy of scale kicks in?
A: No. One lakh is a number for the sale of one model. If you go across several models, you will not see these drastic cost reductions, because what you need for that is a higher level of amortisation of your tooling and equipment in which you have invested. And part of our set-up is that we run in a CKD operation, meaning, we have limited investment, for example, in tooling, because it's not viable to have a second set of tools, if there is already one, say in the US or in Europe or somewhere.
So, in that sense, this amortisation effect is not so heavy on us at the lower volumes. If you have a single-model product line, you will certainly see in that range a significant improvement of your cost position because you amortise your investment faster. But I don't see us getting to 100,000 cars for one model in the near future.
Q. Which is the single best-selling model from Mercedes Benz?
A. It’s the E Class overall and amongst the SUVs, the GLC, GLE and then GLS.
Q. Your latest EV, the EQS – what makes it so special?
A: We bring here now, a car that addresses customer worries on range with what we offer here, which is an ARAI-certified range of 857 kilometers per full charge certified. In simple terms, you can drive from Mumbai to Pune, maybe back and forth, with no problems ― maybe even twice. So, in that sense, the car is a completely new dimension in what's doable. I think overall, for us, we are going into a different era, which is why it makes sense to go into local production.
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