Chennai: “We had announced in May that we would pass on the benefits of GST to our customers and we got a lot of orders. By October, (after the cess was revised) we realised that we had made a mistake,” said CEO, Mercedes-India, Roland Folger, speaking at the launch of sixth and seventh AMG models in the city. ‘We will adjust it in sometime. Due to the high taxes, we often have to explain our customers as to why our cars are priced quite high.’ He added that taxes are only factor that keeps the auto firm from performing at its best. In the meet he spoke about GST, new launches and a lot more. Excerpts of the interview:
Q) Would you say that transactional problems created by GST have put off customers?
A) Our customers are resilient. In India, we have to look at different States and the festive season as well. We knew that we will struggle in October and it is under control. When the news of GST first came in May, we were optimistic. We saw a huge rise in demand.
Q) Is there are need for price correction again? Did GST show positives?
A) We are pretty much back to pre-GST levels. There was a blip, ups and downs and now we are back to normal. The new tax regime showed how much potential there is in India. We are paying significantly more with 28 per cent GST. If it was at 15 per cent, we would have had extra volume. It is a missed opportunity. Extra revenue cannot only be garnered through taxes. We would like to help (the government) with extra revenue (through sales) and by creating extra jobs. GST has brought a lot more tax transparency, therefore creating more revenue internally in the country. (But) the country that has a highest tax bracket is never the one to perform better economically.
Q) How much is AMG contributing to your portfolio?
A) It is small and that is why we call it the halo effect. We make good money and the margins are very good. I hope there is never a day that we have to depend on AMG. The average age of the AMG customer is at 30 in India while the average age of Mercedes customer is 37. India is a unique country and this has a much more younger population. Germany is the exact opposite.
Q) Where is it in the performance segment?
A) It is a 500 unit market in India and AMG has more than 50 per cent market share. AMG sells more products that Porsche does. There is every possibility that every G-Wagon you see is a G63.
Q) Are there any targets for the new cars? Will you bring in the new A-Class here?
A) No. Setting a target would mean that we would be pushing (the market). There is no competition (for us in the segment). We have a product portfolio. I cannot bring cars that I do not have. Assuming that we would want to bring the car to India, we can bring it very fast.
Q) On localisation levels…
A) It is upto 60 per cent. We are trying to find a local manufacturer who can provide parts for us globally. Whatever we do is more on the volume side because with more volumes, comes more local supplier needs. Everything is connected to one-another. More volumes will bring in more local manufacturers (into play).