Roland Folger has told the ministries concerned that they are cutting India off from the rest of the world by making it a highly protected market, the Mercedes Benz India CEO & MD tells Ajay Modi.
Illustration: Dominic Xavier/Rediff.com
The interaction with Roland Folger of Mercedes Benz had been planned in Mumbai, close to the company's headquarters and plant in Pune.
But launches bring Folger to the national capital often and we agree to have breakfast ahead of a launch.
We decide to meet at the K3 restaurant at 8.30 am in the J W Marriott, Aerocity, a venue for most car launches in Delhi.
I arrive a few minutes late and Folger is already there, in a Mercedes Benz-branded T-shirt and jeans.
I ask him to order, but he opts for a juice and then a cappuccino. "I am back from a vacation in Malaysia and need to bring my weight down," he says.
Folger, 57, I am told, is health-conscious and often goes to the gym.
We meet at a time when the GST Council is contemplating raising the cess on large SUVs and luxury cars from 15 per cent now to 25 per cent. I am conscious not to start the conversation with this not-so-pleasant topic.
So I ask him about his experiences in India (he completes two years in October). "India is a country of so many impressions, cultures and languages. I am still struck by the fact that nearly every state has its own language."
Folger spent four-and-a-half years in Malaysia where he was the chief of Mercedes Benz, before moving to India. So he cannot resist drawing comparisons between India and Malaysia.
"I keep telling my friends there that Malaysia, area-wise, is only as big as one state of India. It is difficult for the human mindset to come to terms with such a huge land mass and people," says Folger and draws another surprising comparison.
When he came to know about his next stint, India, he compared the number of cars that Mercedes sold in India to that in Malaysia. '
To his surprise, he found that with a population of 1.3 billion, the company sold only a slightly higher volume than it did in Malaysia, a country which then had a population of about 30 million.
Folger is therefore optimistic that there is more to gain in the Indian market, where the luxury segment is just one per cent of car sales. So he wishes to have an extended tenure in India beyond October 2018.
I ask him for his views on the visible resistance to luxury goods in the form of higher taxes and so on. He says he recently became comfortable enough to speak about it.
"I found it intriguing that given the religious structure and beliefs here, there is a lot less materialism than you would find in the West. Therefore, there is a general acceptance that an influential person does not have to have a lot of wealth..."
"These values shape personal preferences and habits," explains Folger.
Indians need not look at wealth and luxury as a bad thing, he says. "In the US if anyone shows his wealth, he also shows that he is doing a lot for society by paying taxes and creating jobs. Here one employs 15,000 to 20,000 people, provides for their families, and still does not feel comfortable showing his wealth."
A change in attitude would open up more markets for luxury cars.
I question him about the economic benefits of the luxury car industry and the sensitive issue of the higher cess.
He says luxury cars have been at the forefront of automotive development in safety and emission innovations.
"We can be much faster than mass producers in adopting technology. We have 3,000 people employed with dealers. These are some of the highly qualified jobs in the sector."
Folger says he has tried to make it clear to the ministries concerned that they are cutting India off from the rest of the world by making it a highly protected market.
"We could and would want to bring in a lot more cars, and create a lot more jobs," claims Folger and adds that Germany is looking at India and the investments here.
They question decisions like the diesel ban and now this relook at the GST rates.
"It is difficult to explain why somebody in the finance ministry could make such a mistake."
Folger believes that the assumption of raising tax revenue by increasing taxes is flawed.
"We tried to explain to the finance ministry that if we get a 28 per cent tax, that could double our volume instead of the proposed 53 per cent. If you double the volume, you get not just more taxes but also create jobs on the supplier side and the dealer side and everybody would pay more taxes."
Folger has been living in Pune since September 2015 with his wife Suzanne.
His three children -- two daughters and a son -- are yet to visit India because they are studying overseas.
The Folgers are in Germany once every two months to visit their parents. "We are waiting to have a reunion in India. They (the children) have heard so much about the country from us."
Folger's wife is busy learning Marathi, but he says he has not attempted to learn Hindi yet.
The couple have gone holidaying in states such as Rajasthan and Punjab and Folger remembers them especially for the local food.
"The dining experience is highly interesting and so is the street food, but you needed to have a local person to guide you," he says, remembering the lassi and jalebi he enjoyed in Amritsar.
Folger meets many of his dealers over dinner and says he prefers to meet them at their homes instead of restaurants. "I get to learn more, know about their families... The family orientation in India is outstanding in a positive sense."
I am keen to know about the new things Folger is doing at Mercedes Benz, the only company he has worked all his life ever since he joined it in 1979.
Folger said he has worked to bring in a change of culture at the organisation, which employs 400 white-collar employees and 1,400 workers at the plant in Pune.
"We spend so much time in meetings and there we need to become more efficient," says Folger.
He has come up with a set of 10 rules on meetings: Come prepared, have the facts ready, don't pick fights with people (fight before). Lots of thinking went into that and 'we are promoting this", he says.
I remember Folger having told me earlier that the company had decided to put in place a core team, empowered to take quicker decisions when the boss was away.
The need for it was felt when the Supreme Court banned sales of large diesel cars in the National Capital Region in December 2015. Folger was on holiday then.
"I still remember the dreadful date, December 16, 2015. That also happens to be my mother's birthday."
Everybody in the Pune office was waiting for him to take decisions to reduce the impact of the ban.
"Most organisations here are top-centric. When I came back in January 2016, we started doing things. This was not ideal," he says.
So he put in place a team representing key departments and has empowered them to decide on things in emergency situations.
"As long as you can improve your market situation even in a declining market, you win."
That is a lesson Folger learnt when he was part of the bus division in Mercedes and Europe went through the eurozone crisis.
That halved the bus volume, but Folger said the company increased its market share by five per cent.
He would like to repeat this if the cess goes up and impacts the luxury market here.