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'We are very proud that we are selling Mercedes Benz to Indians, made by Indians, that India is capable of such fine quality'

When Till Becker de Frietas came to Bombay exactly one year back, to take over as the CEO of a sick and terminally ailing Mercedes Benz, no one gave him much chance of success. Even though he had very successful runs in Brazil and Portugal for the world's most prestigious car company. Today, as Mercedes Benz quietly limps back to good health, Becker explains his strategy for change and revival that has brought the company back from the edge in an interview with Pritish Nandy.

Those eyes! Why did you choose the model with the eyes for India?

The E Class is our most successful model. It is our bread and butter. The last one was produced 2.3 million times and this one is currently the most sold model in the world. It is a car that works for business, and the family. It is versatile, popular, successful. That is why I thought it was the right car for India. As the base model.

Of course, all our models have specific advantages. Specific for the people we are making them for.

Why didn't you choose the new A Class for India? It was sexy, different, more contemporary in terms of styling? Or the new M Class? They would have stood out against the rest of the cars on the road. Or, say, the SLK?

Well, nothing is finally decided. We are trying out the E Class as the first bet. In terms of price and popular acceptance, we believe the Indian buyer is more likely to accept it as his first choice. In preference to the A Class and the C Class.

And the M Class? The S Class?

We don't even have the price list for the M Class right hand drive. It only exists till now in its left hand drive. So we cannot even do the analysis. The S Class is currently too expensive. You must remember that, all in all, we are working to a specific strategy. To prove that a market for the Mercedes Benz actually exists in India. To meet that objective, the E Class was a natural choice.

How many do you intend to sell in the first year? How many do you hope to sell?

We started in January. Between February and today we have sold 250 cars.

Are you happy with these numbers? They seem far too low to make you a viable player.

We have quite a good order bank despite all the political uncertainties. Our target, to begin with, is modest. Between 1,000 to 1,500 cars. We want to be in India. We want to demonstrate our presence in the Indian auto market. Not with volume. Not with numbers. With quality. If we can do that successfully, I will be very happy.

Why did your first model fail? Was it an obsolete, environment unfriendly model as its critics claimed? Or was it simply poor marketing strategy?

I have a different point of view regarding the old model, Pritish. We are selling the last few of them, as used cars. Used by our directors. Now, if you look at the prices, you will see that we have two target groups of buyers. One group is looking at cars priced upwards of Rs 2.19 million. While the other is looking at cars priced between Rs 1.5 and 1.6 million. We see them as two distinct client groups. You will be surprised to know that, all of a sudden, the old model has attracted a huge demand-at the new price. We have sold 70 cars recently. Creating what you could describe as a revival of the model.

It only means your original pricing strategy was cockeyed.

No, it means that people knew all along that it was a good car. They see and like the new car, which is far better of course. But it is still expensive. So they realise that at Rs 1.5 million the old E Class is a fine buy. Our mistake was not in introducing that model in India or in pricing it the way it was. It was in not explaining the background. In not explaining that this was our most successful model worldwide. That it was also a more mechanical model.

We did not have a strong dealer network. That is why it was the right model for India. It was wrongly marketed. That's all.

It also taught us that there are two market segments for us. One, beyond the Rs 2.1 million price. The other, between Rs 1.5 and 1.6 million. Both are strong segments. We can cater to both if we price our cars right. This we did not know when we launched our first model.

Do you think you have a good, strong, sexy model of the Mercedes Benz, one that is an international bestseller which can be launched in India at a price of Rs 1.5 million?

We are checking that out. But, for the time being, my research has not been very successful. However, I have successfully established a new product slot. A product slot that is being currently occupied by the used E Class model, driven 1,000 or 2,000 kilometres, second hand. People are ready to pay anything between Rs 1.5 million and 1.9 million for this product.

Sooner or later, the new E Class will fit into this slot as people sell off their used cars two years down the road. This means: We have now created a legitimate, well priced second hand market. A market over which we have effective control. That itself is an achievement. Our next target is to fit into this slot a new product from Mercedes Benz.

When do you hope to do that?

Our first objective is to see that the new E Class succeeds. That it is marketed correctly this time. Once we meet this objective, we will bring in the second product.

Meanwhile, you intend to reserve the slot with a second hand product? Do you think that is possible in a market of glut?

Why not? The Mercedes Benz brand name has very strong emotional appeal all over the world and India is no exception. I am confident that we will get things right this time.

But how can you survive in a multiple model market with a single model strategy?

We know it will not work in the long run. But, for the time being, we are confident we can stay with this model. We can build up our dealer network and strengthen our service.

What is your indigenisation strategy? As you progressively indigenise, won't there be pressure on you to drop prices?

Here, we are bang on target. We currently use 52 per cent local content. We are very proud of this and India should be also very proud of this. That we are selling Mercedes Benz cars to Indians, made by Indians. That India is capable of such fine quality. Mercedes Benz quality. In fact, we have some very specific ideas about exporting components made out here. But that is another chapter by itself.

Have you managed to export any of your India-made Mercedes Benz cars?

We will. We will export 600 such cars this year.

Where to?

To different countries. Mainly in Asia.

Interviews