Footfalls in Mercedes showrooms fall by 50-60% post note ban

Luxury carmaker Mercedes-Benz India today said footfalls at its showrooms across the country fell by up to 60 per cent in November due to banning of high denomination notes by the Union government. The wholly-owned subsidiary of the German auto major Mercedes-Benz is also expecting its sales to fall marginally in India during the current year, mainly on account of ban on large diesel vehicles in the National Capital Region till the middle of August.
"Due to the demonetisation drive by the government, there is a short-term impact on footfall in our showrooms. It has fallen by 50-60 per cent in November... Some of the potential customers might have lost some cash," Mercedes-Benz India Managing Director and CEO Roland Folger told PTI here. Declining to share sales figure for the month, he added the company hopes that the trend will be "normalised" in the next one or two months with people "just postponing" their purchases as the policy decision had an "emotional impact". "Our policy is not to sell cars on cash. On November 8 night, our dealers informed that people came to showrooms with bags of cash. We told the dealers not to sell cars to them. We fully appreciate what the government is doing," Folger said. He informed that 99 per cent of Mercedes-Benz India's sales are done through finances, but accepted that a small percentage of dispatch takes place through cash route also at dealer level.

"Not accepting cash sales may impact negligibly on sales. But it is about our position and image... Usually the large cash transactions are not legal," Folger said. When asked about sales, the CEO said it is likely to fall marginally during the current year.
"For 2016, we had set a two-digit growth target. But due the diesel ban in our largest market NCR, sales in the first nine months were severely impacted. So our sales in this year will be flat. In fact, in can be on negative side," he added. Of 13,502 units it sold in 2015, 25-30 per cent were contributed by NCR, of which 80 per cent were diesel vehicles. During January-September this year, the company sold 9,927 units across the country.

When asked about next year, Folger said the company aims to achieve a double-digit growth, but refused to put a number. He said the company is now increasing its investment in the country following the withdrawal of the ban on diesel vehicles by the Supreme Court, but declined to share any figure to substantiate his claims.
Mercedes-Benz India today rolled out a new showroom in Guwahati, its 88th outlet and the first in North East. Folger said with opening of the latest dealership, sales contribution from Eastern India will grow significantly from the existing around five per cent.