Mercedes-Benz India eyes more than 30% sales growth backed by heavy demand for luxury cars

With an order backlog of 7,000 units, its highest ever, Mercedes-Benz India is expecting to close this year with a more than 30% growth in sales compared with last year as demand for its vehicles were on the rise, said MD and CEO Martin Schwenk. This was in comparison to to the luxury car industry growth of 8-10% per year.

“We have seen very good sales so far. We have very high order book. We have seen high festive season demand since July and August,” Mr. Schwenk said in an interview.

“We are ramping up on the supply side. This festive season will be one of the best we have ever seen in India,” he added. “We do not see any cooling effect on the demand which is pretty healthy,” the MD said.

Attributing the demand pull to the product portfolio, he said, “So far we have reported 30% higher sales as compared to the same period last year.”

“Again, on the demand side, it will be significantly higher. In terms of sales, the outlook is equally positive for the entire year,” he said.

“This year should be our best year which we had in India so far and the signs are very positive,” he added.

Stating that supply disturbances were still on, he said the semiconductor issue was not completely resolved. “So depending on model we still have 4 to 5 months of waiting period and 8 to 10 months in case of larger SUVs,” Mr. Schwenk said.

“Probably the long waiting period would not go away, but improvement would be seen in next 6 months. But this year, I am sure we will face constraints,” he said.

He said despite the [supply related] issues, “we are selling better than the previous year and at the same time adding net orders and most customers are willing to wait to get our products.”

On the future of Internal Combustion Engine (ICE) vehicles, he said, “I personally think vehicles with conventional engines will run for many years and most customers are opting for these. These cars will be updated and till the end of this decade there will be significant number in all ranges.”

“But it is clear that the transition to electric cars has already started. In 5 years, 25% of our total volume will be electric cars. That percentage will accelerate towards the end of the decade. Some of the replacement models in the future will be electric. The market has not yet tilted completely to electric,” he said.

Keeping in mind the future, the company will on Friday roll out the locally produced electric luxury car EQS [from its plant in Chakan] which will be priced lower than the imported version.  “We believe this car will sell more so we have decided to go for local production. With this we will start the journey for replacing ICE vehicles with electric,” he said.

In January 2020, the company had unveiled the EQ brand for its range of electric vehicles. By end of this year, it will have four models of electric vehicles and will keep on adding to grow the portfolio, he said.