Mercedes powering through pandemic. And not just in India

Mercedes is looking at making the most of electric power to usher in a better, more sustainable future but at a time when luxury car makers across the world are facing rampant challenges in a Covid-19-besieged world, this Germany car maker has fared better than them and perhaps even better than what investors may have expected around the start of 2020.

Mercedes-Benz India on Monday announced it had sold 550 new cars in India during Navratri and Dussehra. The company informed that demand is especially observed in Delhi NCR region, followed by Punjab and then the western hubs of Mumbai and Gujarat. A product offensive from the company may have helped, along with an innovative brand campaign ‘Unlock Celebrations’.

The performance of Mercedes-Benz India is echoing the performance of Mercedes and parent company Daimler AG at a global level. The German luxury car and truck maker has been lauded for navigating the choppy Covid-19 waters with the skills of a veteran navigator and delivered 5 billion euros ($6 billion) of free cash flow during the July to September quarter. An opinion piece on Bloomberg reports that the operating profit is now expected to be about the same as last year’s 4.3 billion euros - significant even if the company faced challenges galore in 2019 as well.

The same report highlights how Mercedes has managed to generate cash by reducing stocks of unsold cars and trucks while resuming production gradually. This is in contrast to what French and Italian car makers tend to do which leads to cash generation when revenue grows but has a reverse effect when production is hampered.

This and the fact that the target customer base of white-collar clientele holding on to jobs while cutting back on luxury spends in Covid-19 months like expensive hotel stays and pricey meals means that Mercedes is now poised to make the most as the rich and famous resume splurging.

The market for luxury cars in India is significantly smaller than the one in several other countries in Europe, the US and China. Factors at play here, therefore and for a plethora of reasons, may not be identical to the ones that abound elsewhere. And yet, Mercedes' increased focus on the Indian market - in terms of product launches, impetus to local manufacturing and teaming up for easy finance options, may well be helping the German auto giant carve out a more significant lead.