Buying a luxury car is one thing, being able to service it is quite another. We’ve all heard stories of wallet busting service bills, of no free services, of parts costing an arm and a leg. But what’s the reality? Are luxury cars really that expensive to maintain?
To find out we headed over to Mercedes’ manufacturing facility in Chakan just outside Pune. The facility is unique, not just in India but even globally in that all of their operations are based at this one facility – manufacturing, sales, marketing, aftersales, communication and now a full-fledged training academy, an integrated parts warehouse and even a car modification centre for limited-edition models. Mercedes-Benz being the luxury market leader is also an ideal test case to gauge service costs, if their rivals haven’t already implemented the plans Mercedes are offering, they are sure to follow.
Santosh Iyer is the head of Mercedes-Benz India’s after sales operations, tasked with overhauling the commonly held belief that luxury car ownership is an expensive proposition. “The best part about luxury cars is they are fun to drive,” says Santosh. “Customers don’t use it to their potential because of maintenance issues. But with the service packages, you do not really have to worry about the wear and tear and enjoy driving to the fullest.”
So what are the service packages?
“Our cars come with three years warranty, we are the only ones in the luxury segment. The service packages take care of the ownership costs. Anything related to the engine, powertrain, including wiper blades is covered under the service package.”
Mercedes has two kinds of service packages, Compact and Compact Plus, the latter also including brakes and wheels under the scope of work. Tyres do not come under this, they have a separate insurance cover. The service packages are configurable and each model has around 45 different service packages, starting with two years and going up to ten years at different mileage schedules. For the A-Class a two-year package costs Rs 49,000, going up to Rs 2,72,000 for ten years. For an S-Class, the two-year package costs Rs 81,000, going up to Rs 9,47,000 for ten years. All of these packages are available and configurable online and this includes the AMG models with prices starting at Rs 2,22,500 for the CLA 45 AMG for three years, going up to Rs 7,45,000 for four years and 80,000km for the G 63 AMG (which, when you take into account its Rs 2 crore price tag, is actually very reasonable).
Says Santosh, “The packages can be bought up front or via EMIs. The service package is transferable, so the residual value of the car goes up. We are also evaluating refund options after GST is established.”
The thing to remember here is that luxury car manufacturers don’t have the concept of free services. Every service is charged and costs nothing less than Rs 40,000. Opting for a service package, especially when a two-year package for the E-Class costs Rs 64,700 is an absolute no-brainer, is it not?
“Exactly,” says Santosh. “Over 40 per cent of our customers buy these packages now. 60 per cent are not aware, there is no reason otherwise.”
Making servicing affordable is one thing, improving the quality of the service is another and that’s been a major focus area for Mercedes over the past two years. “We now have young customers for whom time is important and they may not have drivers to drop their cars. We can now service a car within two hours, if it is a regular servicing. You can book the service online and get the car picked up and even dropped. You can talk to the service advisor using the app. You also get SMS alerts at each stage during the service. We can also monitor the car’s health during a longer term once we have the data and send service reminders.”
Speeding up the turnaround time is the new parts warehouse, located at the same premises in Chakan. Spread over 16,500 square metres, it is the largest of its kind in the luxury car space and also falls under Santosh’s purview.
“The turnaround time for the customer has come down by 40 per cent. We are much closer to the market and stock can be located easily. The parts can reach even faster once GST gets implemented. We have 75,000 parts stored at any given point of time in this logistics centre. Our average pick rate is more than 98.5 per cent. The parts are always available to customers or dealers. The parts can also be flown from Pune. The costs are incurred by the dealers and us, because it is our concern and we should have diagnosed it earlier. The parts centre came in 2016, and the logistic efficiency has kicked in from this year.
“The mandatory air freighting to workshops is a new initiative across the network. It is a continuous process. We also get lot of parts from Singapore, which is our regional logistics centre. So earlier we had to wait for Germany to respond for parts, now we do not. There are some chassis specific parts or wiring harness, interior colour or dashboard that are manufactured in Germany and take time. But anything not chassis specific, that is all available here. And dealers are fully aware of our stocks as well. We are fully transparent with them so that we don’t waste time in checking the availability.”
I ask if the same turnaround time applies to AMG cars as well. “If there is even one car in the market, then we get the parts. AMGs for examples, the body parts may take some time but maintenance parts are here always.
“For AMGs the technicians in the workshops undergo specific training, that brings a better quality to the diagnostics and better service. At AMG Performance Centres we are rolling out dedicated AMG bays for service. An AMG customer can see the car being serviced now. We are going to allow customers access to our workshops to see what kind of jobs are happening on their our cars. This will happen soon.”
Adjacent to the parts centre is the Mercedes-Benz Academy that addresses the biggest problem for Mercedes-Benz and every other car manufacturer in the country – getting trained manpower. Staff at all the dealerships go through the courses at the academy which is setup to train 225 participants every day. There’s also a Mechatronics school and partnerships with colleges in Pune, Aurangabad and Trivandrum to churn out skilled manpower.
Santosh picks up on the burning topic. “In India, the vocational training concept does not exist. It is next to impossible to get trained people. We have 1 million engineers passing out every year. They are all theory based and the basic auto knowledge is missing whereas in Europe there is a mixture of both. Because of that the engineers do not know much about cars. The cars are more electronic based and not mechanical. They are unable to diagnose and work on the cars because of the complexity.
“We have programmes like mechatronics where we train them for one and a half years. Modules include chassis, electronics, brakes, interiors, comfort and safety and then they can choose a topic and build a career. You can join the programme as a works manager and become the service manager of a dealership over a period of time as you learn and grow.”
In addition to training manpower for dealerships, Mercedes also provides diagnostic support for dealership. “We just introduced a new system called Sentinel Pro. Each customer has data on their key, the key continuously stores data. The key station in the dealership pulls out data from the key. This data is analysed and if there are faults, the fault code is analysed with data on the central server in Germany. The computer analyses the data and gives out three solutions to the engineer. If the computer is not able to do it, it shows up a questionnaire and the service advisor can ask the customer for feedback and then input it to the computer for further feedback. It helps our backend get better as well.
“The diagnostic codes are sent online and the flying doctor does not need to go anywhere. If any visual inspection is required or sometimes, say the engineer needs to listen to the engine sound, even that can be done remotely. The National Remote Diagnostic Centre is located in Pune. There is also an online module if the problem is not resolved and then Germany steps in to support us. We have nine flying doctors in India, I think this is the largest number in luxury space. Three are in Pune, three in Delhi and three in the South. These guys are available to fly into the location and support the customer. We have requests from the government also, our flying doctors are there for major events as the government uses our vehicles.”
The Academy is part of Merc’s massive Vehicle Preparation Centre that can house 5700 cars over five floors. Of interest to us is the car modification centre that can do special editions and limited editions. And this entire facility was setup in a record time of just 18 months.
As we walk out of the centre I ask Santosh if there are various grades of service efficiency for different customers. “We don’t distinguish, be it S-Class or C-Class. We should be the benchmark in the industry. We should be the Mercedes-Benz of service, that is our aim.”