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COVID-19 lockdown | Will rethink our business: Mercedes-Benz India CEO

In an exclusive interview with Moneycontrol, the MD & CEO of India's biggest luxury car company highlights the measures it is taking amid the coronavirus pandemic.

April 13, 2020 / 10:03 AM IST

Sit tight and wait it out. That is the order being followed by the automotive companies whose factories stopped buzzing after the lockdown orders due to the coronavirus pandemic. In an exclusive interview with Moneycontrol, Martin Schwenk, Managing Director and CEO of the country's biggest luxury car company - Mercedes-Benz India (MBIL), highlights the challenges ahead and the measures the company is taking.

Q. What is the real disruption to business because of the COVID-19 pandemic?

A. COVID-19 has created an adverse impact on the automotive industry across the globe and in India as well. In a market which already is facing strong macro-economic headwinds, the current sales stop adds up to the challenges even more. It is difficult to predict the future. Flexibility is needed. The current scenario is a stress test for our global supply chain, and it also applies to India. COVID-19 is influencing all of our lives. It can be expected that it changes the consumer behaviour for the coming months, e.g. increased online activity, trend to share personal cars or use public transportation.

Q. What is the economic impact of the lockdown?

A. We are yet to put any statistics to that though we are monitoring the situation daily. We have shut down our production temporarily and also our dealerships are closed due to precautionary measures as we want to take all possible steps to break the chain. The overall duration of the current restrictions and the various fiscal measures undertaken in major economies will decide the impact.

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Q. Will you halt or postpone any of the planned initiatives because of the unprecedented situation?

A. We will not cancel any of our major planned initiatives as we want to continue to create customer interest and demand. We are not immune from the overall slowdown in consumption and spending. Hence, we have to re-calibrate and re-prioritise our objectives for the year and for short-term. For instance, we will be having our key product introductions and customer outreach initiatives. However, we may adopt new ways of doing things depending on the further development there might also be delays.

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Q. Does this give you a chance to go fully digital in your sales approach? How many cars have you sold through the digital medium so far because of the shutdown?

A. The current situation gives us new ways to rethink our business and support our customers, and digital approach is an emerging trend as many customers are adopting the digital experience seamlessly. We started selling cars online in 2019, and we already have witnessed positive momentum. There is certainly a surge in the online inquiries as people are able to visit the site and check availability of cars even remotely.

Q. The shutdown has brought everything to standstill. How long before you believe customers will start buying again?

A. Right now it is difficult to assess as the key priority for everyone remains to come out of this crisis safely and stabilize. I would believe it will take some time for things to stabilize and demand to come back- I would not put any timeline to it. Our new products will certainly help to create customer demand. We, however, are working towards ramping up production and sales once things normalise.

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Q. When do you see imports from Germany start again?

A. In the short term, we have enough stock to start production. We will then have to see how the global supply situation from China, the US and Europe develops, and we will prioritise accordingly.

Q. Where do you see the sales of luxury cars end in 2020, not just for MBIL but for the industry?

A. The market challenges which are there in Q1 will continue for some months, given the current situation. It will remain a challenging year for the industry. At the moment, it is impossible to predict.

Follow our full coverage of the coronavirus pandemic here.
Swaraj Baggonkar
first published: Apr 13, 2020 09:49 am

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