Interview | Pawin Sriusvagool : Locals ‘appreciate the sense of luxury and they can afford to do so’

Last year, Mercedes Benz clinched the number one spot for overall sales in Macau, according to Pawin Sriusvagool, the general manager of Zung Fu Motors (Macau) and exclusive retailer of the German carmaker in Macau.
The Times interviewee stresses that Macau is the only region in the world where Mercedes Benz was the bestselling brand. “It is quite special for a small market like Macau to achieve this kind of status,” he adds.

MDT – Why do you think that Macau was the only region in the world where Mercedes ranked first?
Pawin Sriusvagool (PS) – I think it has a lot to do with the economy. Macau is considered as one of the fastest growing economies in the world and it has been like this over the last ten years. The population is wealthy, and most importantly, our Mercedes Benz brand is so strong, they are appealing to customers, to all segment groups. (…) Of course our competitors are quite strong as well, but in our products, especially in newly launched cars, we focused a lot on design and performance. For lot of the cars, we would add the EMG element as a selling point. So by doing this, it really captured the customers’ attention. We have market scale and marketing events, strengthening the brand element. But I think most importantly, we have been in the business for 22 years, and we know our customers very well. So basically we are selling cars to different generations, to the grandfather, the father, to the newlyweds and the children. It allows us to be the number one brand overall in Macau.

MDT – Which customer group is the major contributor to your sales volume?
PS – Traditionally it’s the casinos. They have previously made up a large percentage of our business before, but now I would say it’s everyone. Before we would focus on the luxury segment – the C, E, and S classes – as it played an important role when we first started selling cars in Macau. Right now the S Class makes up only a small faction or portion of our sales. So right now, we have more and more working professionals [as customers], people who work inside and outside the casinos. The products are for everyone now, we have over 30 models to choose from. The compact segment currently makes up the largest  sales contribution. There’s a lot of growth in the compact segment. People are switching Japanese cars for European cars. About the proportion between European and Japanese cars on the road in 2014, European cars now comprise close to 60 percent of cars, while Japanese cars only make up 40 percent. This is because customers can afford it and there’s also a change in customer preference. I think people in Macau appreciate the sense of luxury and they can afford to do so. Over the past 22 years, we made a lot of changes to the organization. Now we are displaying more than ten cars in the showroom. We have also expanded into other business, such as smart cars and commercial vehicles.

MDT – Are the main costumers local?
PS – Yes, the majority of our business is for local people, because cars must be licensed and driven in Macau. Most people who buy our cars are people who have stayed here for a long time.

MDT – What was Mercedes’ overall growth in 2014?
PS – For Mercedes Benz, the year-on-year growth was about 27 percent. We sold over 1,500 cars last year; the previous year we sold approximately 1,200.

MDT – In spite of that growth, do you acknowledge that there’s a slowdown in the local car dealer industry?
PS – Definitely, there’s a slowdown in the industry. Secondly, as we are growing from a small base, it’s quite difficult to keep a high digit growth consistently every year.

MDT – But you are still confident that you will achieve double-digit growth every year?
PS – For me, it is always my target to grow at a double-digit rate. I am confident about the brand, the product, and the people I work with because our staff is highly trained, but one thing that I cannot control is the force of the market. If the economy begins to slow down, the first thing people will cut down is the number of luxury goods they purchase, so the home will be the number one [area] where they start to save money and not to buy. Cars will be the second item, along with jewelry and watches.

MDT – We’ve already seen gaming revenue plunge in the past eight months. How does that affect the industry?
PS – I think maybe this is the reason why the car market also declined 8 percent last year. But we were still lucky because we had some new products launched last year.  (…) I would say the gaming industry has a spillover effect on all industries in Macau. I guess the key is that we don’t want to get into a price war with any other car brands. The competition should focus on the added value, the service, the product quality and how we make sure that the customers are getting the best that they deserve. So for this year, we’ll continue to focus on some of the new models that will be launched, focus on keeping our existing customers happy. But we will not engage in any kind of price competition, because by doing that, you start killing the industry in the long run.
MDT – So for the top brands, the competition is really focusing on service?
PS – I cannot say on behalf of our competitors, but for Mercedes Benz, that probably is the case. The theme that we are focusing on more and more going forward is the best customer experience: how do we make sure that we provide the best experience  for our customers, from the time they walk into our showroom, to doing a test drive, to car delivery… and make sure that they grow with our company throughout their lifetime.

MDT – What are some of the main obstacles hindering the expansion of the car business?
PS – The space limitation, the road network, is something that’s going to affect us. Because traffic is becoming more and more problematic in Macau, we don’t know what the situation is going to be like in future. We are very much looking forward to more opportunities to be presented by the government; for example, the expansion in Hengqin Island, which will have a positive effect on our industry as well. It’s quite clear that our group is quite interested in going to Hengqin and investing – it could be in the form of another car dealership or something of that sort.

MDT  – Besides the Hengqin project, an HK-Zhuhai-Macau bridge is under construction. Will that have a significant impact on car sales?
PS – Of course, when the new bridge that connects HK and Macau is up, the situation will improve as well. Together with the opening of Hengqin Island, these are the two bright sides we are looking forward to. The new resort projects in Cotai are definitely a positive factor. This will create more jobs and people will become richer. The negative side is that it’s going to be quite a challenge to hire people to work for us, because we’ll have to compete with the casinos for the qualified workforce.

MDT – The younger generation wants greener transportation options instead of having cars. Will that also have an impact?
PS – That could be the future trend, because we can see this from the development in Hong Kong where people have switched to more mass transport. I think in Macau we still have to wait and see. It’s too early to say, as we don’t know whether people are used to the new mode of transportation. But at the end of the day, there’s still a large group of the population who still prefer convenience, luxury, and enjoy driving.

MDT – MB’s global strategy is to capture the younger generation and keep them growing with the brand. How does it work in Macau?
PS – That is always the case in Macau. The compact cars allow them to become a first-­time buyer. After they grow wealthier, we hope they will move to C, E or S [Class]. So it’s about providing the best customer experience and securing them as customers for the entire lifespan.

MDT – Is there such brand loyalty in Macau, where we see all kinds of fancy cars in the streets?
PS – I guess the younger customers’ brand loyalty is quite low, compared to the older customers. But it’s all about how we treat them, making sure they are not customers but fans. Achieving the best customer experience and turning costumers into fans of the brand are two things that MB is trying to work on. We hope we can use this strategy in Macau too. Basically right now for every customer event we do, it will really be targeting a different group, because we realized that customers are quite different. We are not treating them with some plain, simple decisions.
MDT – Does the leading status you achieved last year mean that MB has become a mature brand in Macau?
PS – Not really. I think there’s still a lot of room for growth. There are still certain segments we haven’t tapped into yet; for example, the seven-seaters [and] the van segment. There’s still a lot of room for the high-performance segment to grow, and also for the luxury segment. Famous brands like Porsche, Lamborghini and Ferrari are always there. We want to put more effort into this segment. For both, there will be some new models coming out this year or next year. I think this year will be the year of the SUV [sport utility vehicle]. We have seven to eight new models lining up to come out.

MDT – Will the alternative-energy cars also be a focus of your marketing agenda?
PS – Yes, definitely, we are working on this kind of thing. We can be the leader in this sector as well, because not many people are doing this at the moment, so it’s one of the strategies we are thinking of. For Mercedes, there are some cars running on electricity already, but we haven’t introduced those to Macau. The brand already has this kind of technology, but for Macau I think it’s only the beginning. First of all, we need more support from the government in terms of [building] the charging stations, and we need to educate more customers about the environmental benefits of using this kind of car.

MDT – Would you suggest that the Macau government start planning now for the popularization of electric cars?
PS – Of course if you give enough incentives to people, you will see some results in the long run. More support, more charging stations, more subsidies like the tax reduction for environmentally-friendly cars, these are some of the things they can consider. But of course the government should already know what they want to do.

MDT – What do you think are the characteristics of Macau’s car market compared to others?
PS – For the customers, there’s a strong preference for European cars; smaller cars tend to be better in Macau because the roads are narrow. The younger generation prefers the sense of luxury, modern luxury, as well as performance. For the corporate executives, luxury is still an important element, and after-sell facility is still one of the important buying decisions. And for the casinos, the seven-seaters are still a very popular method of transport, but of course, they are always looking for some rare and special elements to please their customers, so brands like Rolls Royce and Bentley are becoming more and more popular.