Peter Honegg is a ‘lifer’ at Mercedes-Benz, and a third generation employee of the firm. (His father and grand-father worked at Daimler-Benz before him). His wealth of experience is exactly what Mercedes-Benz India Ltd (MBIL) needs in the growing and cut-throat passenger car market. Prior to taking over as MD & CEO of MBIL, Honegg has served the company in various capacities such as Strategic Planning, Marketing, Sales, Vendor Development and Network Management, across diverse geographies such as Germany, eastern Europe, Iran, South-east Asia and China.
An avid biker, Honegg is the proud owner of numerous high-end motorbikes, including some classic BMW motorcycles and a Honda Shadow cruiser, among others.
He’s a jovial person to interact with, but with a sharp mind and some emphatic opinions. One gets the sense he does not tolerate fools, but he is protective of his staff, which affectionately refer to him as Santa Claus! Over some excellent cappuccino and cookies at MBIL headquarters, Honegg shared his insights on the Indian market, its growth prospects, where MBIL is headed, its strategies and a lot more.
AJ: Given the increasing competition in the luxury car market, how does Mercedes-Benz seek to differentiate itself in the Indian market?
PH: We are the leaders of the pack. We were first in this market, and we have been first in innovating to engage our customers. You can see it with the Star Leasing programme, Star Drive, the Driving Academy, Golf tournaments and our Star Lounge (at Delhi airport).
AJ: How much has the increase in competition affected your business?
PH: (laughs) We are a training academy for our competitors! Seriously, this is a long term challenge. We are first in India and we are first in everything we do, so it is obvious that our competitors look at us for staff.
AJ: What are the limiting factors for Mercedes to expand its operations in India?
PH: First we have to see the size of the market. Does it make sense for us to make our cars here, or assemble them or import them? So each case is different (referring to the model range). We are not even at 10,000 (units), so sometimes it makes no sense to make it here…but technical capability is also a challenge.
AJ: With the upcoming new B-Class, is Mercedes shifting its focus away from the luxury car market?
PH: The B-Class will be a premium car…we call it premium. It will be lower than Rs 25 lakhs. But we believe that is where the market will grow the most. Luxury and high-end luxury will increase, but big growth will come from the premium segment. The B-Class will be a premium grand tourer and there is no other product in the market like it. So we think we can be different and we can grow.
AJ: The new B-Class will compete on price with the BMW X1 and Audi Q3, and also with the likes of the VW Passat…
PH: See, we believe…(pauses)…there is space for everybody in the Indian market. Some want an SUV, some want a three-box car. But that is why the B-Class will appeal to buyers. Also, we are going to be very strong on value. We do not believe in de-contenting as a long-term strategy. Our competitors might do that, but at Mercedes we believe our customers are paying a price for the star and they will get the best.
AJ: Given your wide international experience, what are the unique challenges to doing business in India?
PH: (point vigorously to emphasise his point) Word of mouth is more important in India than any other country (I have worked in). We engage with our customers because that is important. We also engage with our dealers because they are our friends and part of the Mercedes family.
AJ: There has been talk of a new retail approach. Can you shed some light on that?
PH: We will create big ‘AutoHaus’ in Tier I and Tier II cities. These will be little on the outside of the main city, but will have sales, service, spares and accessories. But we will also have show windows or displays in malls, because we know the customer who is coming to buy a Louis Vuitton bag or an expensive watch is also our customer. But in smaller cities like Indore we will have dealers in the heart of the city.
Our new Brand Centre is also getting ready in New Delhi. It will be five floors and more than 60,000 sq ft of display area. We will show between 28 to 30 cars, including some heritage cars. Maybe later we will open some more Brand Centres in other cities also.
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Peter Honegg is a ‘lifer’ at Mercedes-Benz, and a third generation employee of the firm. Over some excellent cappuccino and cookies at MBIL headquarters, Honegg shared his insights on the Indian market, its growth prospects, where MBIL is headed, its strategies and a lot more.
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