The three-year tenure of Roland Folger, MD & CEO, Mercedes-Benz India, ends this month. In this free-wheeling interview, he speaks of his learnings in India. Edited excerpts:
You came to head Merc in Indiawhen it was facing intense competition from BMW and Audi. What is the situation now?
In 2015, the positive thing was that we were just on the way of taking over the number one position again. We did hard work. On the back of a very good product revolution, we were able to cover significant amount of new products which were attractive for the market. The radical expansion of our service network also helped.
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Then the whole discussion came about the diesel ban. As per data on the environmental impact, cars were responsible for only 16% of the overall emission. Out of that, diesel cars are even less. I found it hard to get facts and figures with regard to the public discussions. And that was an interesting learning curve .... there were other issues in play than the factual issues. It is lot about people that feel threatened in their environment and they were looking for something to pin this on. What I found difficult to accept was that if you want to change something why would you go after the diesel above 2 litres because it only contributes 0.065% of all particles. How is that going to help? For us the impact of the diesel ban was significant. 30% of our overall Indian market was affected and out of that 80% were diesel vehicles. So there was significant dent on our business.
Despite the headwind, how did you bounce back ?
As a company, we now see the headwind as positive. What made us stay in the number one position was that we had learnt a very important lesson that if you stand still, if you believe that you have earned that no. 1 position, then you are more prone to lose it. One has to keep pushing the envelope, keep always moving ahead and questioning the status quo. I think as a company and our dealers have understood that sitting on your laurels is the best recipe to lose them. With that change in attitude and a new level of internally working together have become a crystal point of our development.
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Inspite of our competitors’ aggressive positioning, we have been able to solidify our leadership position. In the past, it was all about product. Now, our focus has increased to stay in contact with customers.
The massive extension of our network is helping to increase volumes. We have also excelled in ‘Indianisation’ of products. For the first time, we produced the E Class in India only for the Indian market. There was certain risk but this has paid off.
What had helped Merc to bounce back?
I think a much more holistic approach to customer satisfaction, giving them the right product and making it convenient for them to reach out to our network. But the biggest differentiating criteria at the moment for us is customer service packages that we have developed. There is always this assumption that it is extremely expensive to maintain a luxury car. We have proved that wrong. We have in certain cases reduced the cost of ownership by 50%.
How satisfied was your tenure in India?
I am proud that I have been able to lead our organisation in the right direction. The way we do things has changed. It is not the same organisation I joined three years ago. The level of expertise and leadership has been completely translated into a new direction. The culture of this company has been massively developed. Each of the management team accepted the necessity to change, and all have worked together in overcoming personal issues. Now all work differently. It is a complete package, and this makes it so successful. That is my biggest achievement. I am extremely convinced that this change in work culture will make us winners because we have put lot of emphasis to empower the middle management. This company will work differently whether the top management will like it or not. And it will work much more differently.
Are there examples of new processes?
We have a completely different structure of meetings. The organization has been streamlined. We used to have board meeting with six people coming from Germany every three months where we could explain to them what to do. This system disabled one to take quick decisions. Now, three of us, the CFO, the head of operations and myself, do all the big ticket decisions here. Then, we have two management teams focussing on sales, marketing, customer care & production. We make so many decisions so much faster than ever before. That has speeded up our reaction time. In this kind of environment, speed is the essence.
Mercedes India has become the ‘Maruti’ of the luxury car segment, controlling about 50% of the market. How has it come about?
Our very hard work and high dedication has ultimately paid off. We have a unique situation in India because the brand recognition is huge. We just need not disappoint customers. We have realized that we must get new customers continuously. So, we have made huge investment and are producing 9 vehicles here. We have the highest quality standard in local production in the world. Today that there is no measurable difference in quality in the vehicles that are produced here and in Germany. This is a big difference in comparison to earlier days.
The volume of the luxury car industry is very low in India. It is only 40,000. Why so?
I am moving to Thailand, a very small country where we sell around the same number of cars we are selling in India. Several factors have made India not that exponential growth candidate that it possibly could have been. On the emotional side, luxury goods still have certain stigma attached to it. Consumption of certain scale of luxury goods is frowned upon in India. There are cultural, religious and politically motivated reasons that makes selling of luxury goods in India more difficult.I have worked in Malaysia. There it is perfectly okay for someone who has had worked hard to go up to buy luxury products. India does not give you the right to show off your wealth. Then there is the big hindrance of high taxation on luxury goods. Addressing tax revenue issues will provide significant benefits to the economy.
You had remained a vocal critic of Indian government’s policies. What would you suggest to change?
What I have learnt in the three years is that it is not always the government (that takes its own decisions). In the large sense it is caught in between a variety of difficult situations and they have to find their way out. In the past, we were not engaged with the government but now we are. Now we see positive developments. The government has opened up. It was unheard of.
What to expect next year?
We will continue with our path. We will invest in better relationship with customers, we will have stronger engagement through our customer services side. Next year is the next generation compact cars will come into play.