DaimlerChrysler's CEO-India, Hans-Michael Huber, has succeeded in broadening the appeal of the Mercedes, with a variety of products on offer|
Hans-Michael Huber, managing director and CEO of DaimlerChrysler India loves tennis because the game has many parallels to the luxury car business. It requires competence, commitment, target-oriented use of strengths and visionary instinct. He has experimented with it and applied it well during the past three years in India.
In the red till 2000, the Indian subsidiary of the German auto giant has started making profits under his leadership. The company's profit now varies between Rs35 crore and Rs40 crore a year. His strategies have pushed the sales volumes as well. From average sales of 500 units a year DaimlerChrysler sold 1581 units in 2003. Huber spoke about the factors, which helped him for a turn-around and the company's Indian strategies. Excerpts:
Mercedes-Benz, the technology leader in the luxury car segment, has made an appearance in almost all large cities in India. What strategy did you adopt to popularise it among the upper middle-class segments?
Apart from cost reduction and restructuring, our business strategy was focused only on two things: offering a family of cars to customers and having a healthy business relationship with our dealers.
I feel our major drawback was the absence of a bouquet of products. Our marketing strategy was dependent on a single product. Now, we are offering a range of products such as the Mercedes E, C and S classes. This apart, to make our business model robust despite the small volumes, we have enhanced our dealers' network. The support they had extended helped us to make the turn-around.
Tell us something about your new launch, the E270 CDI?
The Mercedes-Benz E270 CDI will be the trendsetter in technology, design and driving experience as it is packed with the elegance, features and styling characteristic of the E-class range. It packs a power punch of a phenomenal 425Nm @ 1800-2300 rpm with the power output of 127 Kw (173 Hp).
This is a substantial enhancement from the E220 CDI, which had a rated engine torque of 315 Nm and power rating of 105 kw. The Mercedes E270 CDI is available at Rs38.26 lakh ex-showroom Mumbai - with octroi, insurance, registration extra.
The E-class has established itself in all the world's markets throughout its 50-year history. The new E 270 CDI (common rail direct injection) is powered by the second generation of leading-edge common-rail diesel engines, that offers even greater advantages in combination with four valves per cylinder, variable VNT turbocharger and intercooler.
What is your sales target this year?
The company is planning to sell about 1,850 cars this year as against 1,581 units sold in the last calendar year and 1,208 cars sold in the year 2001. Mercedes 'C' class and 'E' class are expected to drive the volumes for the company.
DaimlerChrysler said that India will become the outsourcing hub for the company. Could you tell us what was India's contribution to the global oursouring operations?
We procure mainly two things from India - auto components and engineering works. Our global procurement from India has touched euro72 million during 2003. On an annualised basis, this would amount to 8 per cent of the country's total auto component exports.
I expect, by the end of 2006-07, our global procurement from India will touch euro100 million. DaimlerChrysler has also plans to expand its procurement in research and development as well. Currently, we have some engineering procurement from India and we want to increase our procurement in R&D in a big way.
DaimlerChrysler looks at India as a significant sourcing hub because of the major cost advantage and large pool of engineering talent in the country. In fact, a separate division with the Indian subsidiary , DaimlerChrysler Purchase Liaison Office, comprising senior representatives from the foreign parent, exclusively scouts component manufacturing entities in India for its global requirements.
What is India's position globally for DaimlerChrysler?
India is the second most important market for us in Asia after China. We have a long-term commitment to the Indian market and is monitoring additional growth opportunities in the country. Growth of around 15 per cent is a tough challenge for a company that is driven by value and not volumes. The key priority is profitable growth by doing things better. DaimlerChrysler has the objective of generating 25 per cent of its total turnover from business in Asia. DC is currently studying the market demand for new launches in India.
Mercedes-Benz C-class is competing with premium entries in the D plus segment of the luxury car market in India, mainly from Hyundai, Toyota, Skoda and Honda. Is there is any specific strategy to beat the competition?
It is the Mercedes C-class that started the D plus segment, which today is crowded with competition. We foresee competition above the D plus segment in the near future and welcome it. There was no competition for the S-class and E-class. We are hopeful that we can tackle competition with their existing brand loyalty, established dealership and after sales service network in India.
DaimlerChrysler currently enjoys a market share of around 80 per cent in the S-class (large luxury cars), 95 per cent in E-class (full-size luxury cars) and around 80 per cent in C-class (mid-size luxury cars). Moreover, DaimlerChrysler has around 15 per cent presence in standard mid-size cars market, which has presence of other models like Accord, Mondeo, Vectra and Camry.
Any progress on your plans to launch commercial vehicles in India?
We are exploring the opportunity for a niche business in commercial vehicles and I do see an opportunity there. I don't see any reason why we should not start this though I cannot imagine assembly now. We will follow a step-by-step approach with commercial vehicles as with the cars.
We have also done a feasibility study for launching the Jeep as a completely built unit initially, and have shown it to customers in Mumbai and Bangalore. We will take a decision by this year after evaluating the service and after-sales for the vehicle .If we launch buses, they will cater to the top-end and niche segment of the market.
What is your philosophy for success?
My general philosophy on life has long been 'everything in balance.' I take enjoyment and satisfaction from my work, my family and leisure activities. The work I do today allows me to maintain that balance, and I appreciate that I have perhaps greater control and flexibility over my own schedule than others may have.