[congruent.cars]

Here's my hypothesis (could be completely wrong in which case take it with a pinch of NaCl) and $0.02:

01. The context behind this statement was probably the lead(or enquiry) to order conversion ratio of 10% (1500 orders for every 15,000 enquiries). Now where does this ratio come from? Yes, the CRM system. As someone who has worked in the CRM space for years, I can tell you that the sales folks are expected to mandatorily indicate the reason for loss of each enquiry and the Competitor to whom it was lost- while closing an open enquiry as 'Lost'. The 'Reason for loss' & 'Lost to Competitor' fields in CRM are usually a curated list of drop-down values. The sales folks typically end up selecting the ones which are most politically correct w/o jeopardizing anyone OR the ones at the top of the drop-down list. In MB, my guess is that the most widely selected 'Reason for loss' is something like 'Prospect preferred SIP' and 'Lost to Competitor' is 'SIP’! Now, when the big bosses asked for a report/dashboard on the causal analysis of lost enquiries, these probably showed up as the overwhelming reason, competitor. And some smart predictive AI solution, when asked the question - 'How can we improve our Win ratio' might have promptly answered - 'Convince prospects to ditch SIP for EMI'!

02. The actual buyer of MB vehicle, according to me, is someone who can very comfortably afford both SIP AND EMI/outgo due to the vehicle purchase. People, for whom it's a case of SIP OR EMI, should not be the target segment of luxury car category. If at all such people in the OR category opt for EMI in lieu of SIP- the overall experience will most likely end up as unpleasant for both parties. Factors like buyer’s remorse, haggling for every penny post-sale, expecting >100% perfection in the car will kick in and things would go south sooner than later.

[Cresterk]

Anyway, while we are on this, this feels like an attempt to shift the customers' thinking from "oh this costs 70L onroad, I can do a lot of other things with 70L" to "oh this only costs 50k per month" thinking that is now prevalent across the United States. Americans get upsold to spending 70k on a pickup truck because when asked about the price, the dealership conveniently presents it as "just a monthly payment of only 999 usd". They are advertised this way too, with the 96 month loan at 7.99% APR part conveniently hidden in the fine text.

Most Americans are basically drowning in debt. And corporations love it! Nothing is better for business than when people spend money they don't have for things they don't need. In case they default, just repossess the car and sell it to someone else with a big markup over market price since you are the official dealership.

In the case of Santosh Iyer, I believe he wants to shift the market sentiment to the same situation here. Just roll up the car's price into a monthly figure and make the customer think as less as possible about the overall price he is paying.

Also adding on to what other people have said about people who can afford a mercedes but they don't buy it : most normal people see cars as just an appliance to take them from point A to B. They do not care about driving dynamics nor features nor anything else. The number of car enthusiasts is exceedingly small, the ones with the wallet to back up their dreams, even less so. They have other interests that they are more than happy to spend their hard earned money on.

[sid_deb]

Originally Posted by itwasntme

SIPS eating into luxury car sales
Attachment 2384636

Right now buying a luxury car in India feels like a decision taken by the feet given they are the farthest from the brain. One has to upfront pay even more than developed nations like US and Germany courtesy our GST. In return get the privilege of driving on roads which test the driver's capability to the full potential - for example obstacle courses involving potholes which can damage the run-flats, motorists who would happily drive on the wrong side, etc. Strengthen the value-prop and bring it back to the heart for the funds to divert from SIPs

For example, get the government to refund GST for the salaried class (who are already paying above 30% income tax) like businesses and the sales will definitely go up.

[sandygordon]

I do somehow agree to Merc CEOs statement. I have been contemplating on buying a "luxury" car for the past few weeks. Narrowed on a German car and have been trying to arrange finances so that the EMI would be kept in check and the cumulative EMI would not go above its depreciated price five years later.

Even though my earnings are not that bad to buy the car, I do not have disposable income at my hand as most of my money is stuck in investments which seems to be growing well in a "err..bullish" market as of now.

There are no cash sources at least for me, readily available for an impulsive plunge for a German sedan, though maintenance would be another headache which I feel is more manageable.

The above statement would fit people who are just entering the "luxury" space and I am sure would cannibalize entry-level models from the luxury car brands. I have never seen a new C class on Kochi roads in the past few months, although I have seen one GLA in 6 months. Compare to the scenario in 2015 or 2016, I could see a GLA in every corner of the town. Not to mention C Classes and E classes.

The insane taxation and unjustifiable price hike along with the interest of youth in investments have led to this scenario. Moreover I feel there are a lot of other affordable "Luxury toys" for "Manchildren" to play with these days other than entry level Luxury Cars.

[AZT]

There's an uncle in my society who I had once gone to help with his Jio Fiber connection. Did not know much about him except his son and I knew each other back in college and the son is abroad now.

This was pre covid when Jio was launching free service for certain societies. Uncle just randomly joked he knows its free now and will be expensive once we get used to it, but he doesn't care because he's made a lot of money on Reliance shares. Pre-covid this happened and he just casually jokes I own more than 50 lakh worth so Mukesh bhai can have some of my money too. Those are probably worth 4x now. And that was just one company.

Uncle owns no car but lives a comfy life. Travels by rickshaw and Uber when he needs to. I've found similar stories of people with 50 cr+ worth of properties and a good business but happy with their Toyota Innovas. Some people just hate the attention these cars bring.

[hondatoyotafan]

I understand where he is coming from, i once spoke to a fairly senior person at Mercedes in a drive event and he was alluding to the same about the need of increase in EMI based gratification in India to increase sales.

To begin with luxury cars make very less value proposition in India because of the Huge government taxes on such cars. If we could not have taken depreciation of the Kodiaq in our family business i would have never gone ahead for such an investment. Buying it out of taxed income will be very hard.

[VijayAnand1]

I think he has a point, and my guess is, his point is taken for a divergence. Cars of today aren't a luxury like they used to be. Today's mass market cars have 90% of the features what a Merc or BMW had to offer and what we once ooh-ed and aaw-ed upon had to offer. You see, nobody is going to do high speed sprints to let the other guy know who's got so much BHP or twisting power under the hood, especially here in India. No matter how much hp or add-ons one can boast to have, you are only 10 mins off from a car that has 35 bhp or 350 bhp to your desired destination.

With the current level of inflation and unknown future, today's youth are prudent and astute enough to invest in an asset that appreciates than an asset that portrays as being appreciated. Don't get me wrong. Today's youth are least interested in mechanical ramblings unlike their yesteryear's counterparts; they're more into long term; education, good life, financial stability, decent retirement, and I don't fathom anything excipient.

Cars/expensive motorcycles were a lifestyle statement back then, say around 10 to 15 years back. These days you can get a decent BMW or LR, Merc, the fancy titles for a fraction of the cost. Simply put, the WOW factor is no more enticing than what used to be a fancy terminology back then. Netflix was a big gaga back then, today all you need is 200 Rupees to watch all the series Netflix had to offer from its inception.

Reminds me of my experience, a year or so back, when me riding on my R15S and my friend on his Triumph T Explorerm, had to reach a destination, he was faster, louder and did everything grander than my little R15. In the end, I was only 10 mins behind him to the destination point. I sincerely believe therein lies the difference, all that 140 bhp vs 17 bhp. 15 nm vs 123 nm doesn't make a difference when you're on the road and the price one pays for it and trust me today's youth are much, much adept and deft in knowing what they genuinely require versus what they feel they might need to make them feel better.

Cheers!
VJ

[Cresterk]

Originally Posted by sandygordon

I do somehow agree to Merc CEOs statement. I have been contemplating on buying a "luxury" car for the past few weeks. Narrowed on a German car and have been trying to arrange finances so that the EMI would be kept in check and the cumulative EMI would not go above its depreciated price five years later.

Even though my earnings are not that bad to buy the car, I do not have disposable income at my hand as most of my money is stuck in investments which seems to be growing well in a "err..bullish" market as of now.

There are no cash sources at least for me, readily available for an impulsive plunge for a German sedan, though maintenance would be another headache which I feel is more manageable.

The above statement would fit people who are just entering the "luxury" space and I am sure would cannibalize entry-level models from the luxury car brands. I have never seen a new C class on Kochi roads in the past few months, although I have seen one GLA in 6 months. Compare to the scenario in 2015 or 2016, I could see a GLA in every corner of the town. Not to mention C Classes and E classes.

The insane taxation and unjustifiable price hike along with the interest of youth in investments have led to this scenario. Moreover I feel there are a lot of other affordable "Luxury toys" for "Manchildren" to play with these days other than entry level Luxury Cars.

Well that's because in Kerala, a GLA 4matic costs 60L onroad now and a C class costs 70L. And even after paying all that, you don't even get something as basic as keyless entry which is now present in every entry level hatchback from mass market brands like Hyundai, maruti etc. But hey, you get to take your phone out and unlock your car from the mercedes me app for a small subscription fee

[Hayek]

I do agree at a conceptual level that Indians are often too focussed on building inter generational wealth. I have a number of friends who have a net worth in excess of a hundred crores who still roam around in an Innova or at best a Fortuner. They often will still bargain with the vegetable vendor for ₹5 and send long mails to the society email group if there is a proposal to increase maintenance by ₹1000 per month. Their charitable donations, if any, are negligible too. Am not saying that people should spend all they earn, and especially not saying that buying a Mercedes is the best use of one’s wealth. But after providing for one’s retirement in reasonable comfort, and for one’s children’s education, people should reevaluate the value of accumulating wealth. Are your children really going to be better off missing holidays with the family while you are healthy, and instead inheriting fifty crores? Are they the best beneficiaries of large fortunes, or should you look at sizeable bequests to charity instead.

Fortunately this is starting to change. You have affluent professionals starting to pledge to give away 50% of the their wealth to charity during their lifetimes . While that may not be for everyone, the idea that one must pass on enough wealth to one’s children to enable 7 generations to live without working needs a revisiting. Pass on values, pass on education, pass on a network - but do use your wealth to live well during your life and / or to help others.

[itwasntme]

Originally Posted by Hayek

While that may not be for everyone, the idea that one must pass on enough wealth to one’s children to enable 7 generations to live without working needs a revisiting. Pass on values, pass on education, pass on a network - but do use your wealth to live well during your life and / or to help others.

Thank you, nothing to add really. You have captured my very thoughts in your succinct post.

One definite impetus to a change of thinking (w.r.t. savings) has been COVID-19. In my own circle of family, friends and their parents etc., I noted a significant realization that, among others:

A. Life is not eternal; death is only a hairbreadth away;
B. Family & health matters over career;
C. You cannot take the moolah up (or down) with you;
D. Incessantly postponing long-cherished plans will get you nowhere, and
E. Providing for children is not the be all and end all.

Albeit, the above does not necessarily translate into buying an overpriced, high maintenance (both running costs & repairs), expensive to insure, rapidly depreciating, with uncertain resale and sometimes deeply unreliable German automobile.

[neeravnaik]

At heart is the issue that Indian in general tend to be conservative when it comes to spending and saving. This is because finally everyone has to fend for themselves. There is no state welfare taking care of you so we have to save lot more for medical, education and retirement. Luxury cars are generally in consideration of comfortably well off only. Social signaling that comes along with owning certain brands which many people want to avoid.

But there is the other side to it also and things are changing and there are people who are more similar to consumers in the west and that is the challenge of marketing to identify and cater to their needs. They have to work hard and provide real value to consumer who are more demanding here.

Marketers are in narrative building game and I suspect some of that is going on in Mercedes India. Top management want to manage expectations of the Global organization who must be puzzled why such a large country cannot create sufficient demand.

So Indian Leadership want to present this story but at the same time they don’t want the Global guys to completely give up on the market like some of the American brands. So this story of how there is money out there but some keys needs to be unlocked to unleash the full market demand. This way the Corporate remains invested in the long run while keeping expectations in check for the short run.

[RedTerrano]

When I read this first, I scratched my head thinking how SIP could affect any car sales. Took me time to realise it's a different type of SIP.

Secondly, is this gentleman for real? He justifies the reason, stretches the rubber band far too far to connect things, and then blames his own reason?
Seriously?

And in my opinion, his analysis too is flawed.
For the common man, FDs, property and jewellery are the big three when it comes to investment/savings. Too many (including myself) shy away from a volatile commodity like the stock market, over which we have zero control.

And he wants the common man to divert that ₹50K to Merc? Forget down payment, will it even cover one EMI?
Surely Sir, you jest.

Perhaps Shri Nair got burnt by SIP during his younger days and he is still hurt by it?
Or this was an excellent marketing strategy, because lot of people are talking about Mercedes.
And SIP.

[heydj]

Abroad one could use their cars much longer than one would get to use in India. Its not just about SIP instead it's also about usage of that money over time period.

I could buy Range Rover today but what is the point? Usability of that cash is only 10/15 years. Hence settled for other options that are equally good.

What Mercedes should be looking at is how to let owners give up their car after 10/15 years and still pay them fair value that will help get new Mercedes.

Mercedes needs to further realise Indians look for value in all things they buy e.g. if 5L can give them a big car with mediocre features over a small car with good features they would still buy big car. This is one of the reason for explosion of sub 4m sedans with tiny boots.

Hence strategy needs to be to tap into Indian mindset if sales are important else strategy of being exclusive will also suffice. But yes SIP's are important as India does not have many social service benefits like in western countries.

[MT_Hyderabad]

The point is, why people don't buy Mercedes when these SIPs mature!?
India has plenty of all generations. Thousands and Millions of SIPs matured yesterday. Period!

[pratyaksh]

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