Santosh Iyer, the newly-appointed MD and CEO of Mercedes-Benz India, sparked a debate in November when he said that systematic investment plans (SIPs) are the luxury car brand's biggest competitor in the country. He has now clarified that his remarks were made in the context of luxury market growth.
"The statement made was in the context of the luxury market growth, what will happen in three to five years' time," Iyer told Moneycontrol in an interview .
In November, Iyer, who was then the sales and marketing head of Mercedes-Benz India, had told Times of India that SIPs in mutual funds were eating into luxury car sales in India. If a potential customer diverted Rs 50,000 into buying a luxury car instead of investing through SIPs, the luxury car business would "explode," Iyer had said.
"The context of the discussion is that there are a couple of factors to change," he clarified in a January interview with Moneycontrol. These factors, he said, included the fact that the luxury car industry is highly-taxed.
"The other aspect is the infrastructure. Do we have the roads? And the answer today is yes. I personally opt to drive from Pune to Kerala because I enjoy it and the road quality is better," said Iyer.
The third factor is the cultural aspect of how people want to spend their money. "It was never about savings vs consumption. It was about consumers who can afford to buy luxury products," Iyer told Moneycontrol.
He explained that the economy cannot grow without consumption, that money saved in a market without consumption would not grow. "So, if there is a segment of the population who is able to afford it, then it's time to buy it also," said Santosh Iyer .
"Of course, maybe they are able to afford it because of an SIP, because they've invested and saved over the last 10 years, and they have a corpus to buy cars, either at full price or at half price and pay in monthly instalments. So, that was the context of the overall comment. It was never a case of SIP versus consumption. Both work in tandem," he concluded.
Mercedes-Benz India, which posted record sales in 2022 at 15,822 units, had sold over 3,500 cars that are priced above Rs 1 crore last year.
The German luxury carmaker is planning to launch 10 new vehicles in India in 2023
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