Mercedes-Benz aims to boost Make-In-India programme

Mercedes-Benz, the country’s largest luxury car maker, is planning to assemble more cars in India to benefit from lower tax rates and boost sales.

Earlier this week, the German heavyweight rolled out its first AMG vehicle from its Pune factory, making India one of the handful of countries to produce the brand.

AMG cars are performance-oriented vehicles which have been only fully imported into India for sales so far. The AMG GLC 43 Coupe became the first AMG car to be partially produced in India. Outside of Germany, the AMGs are also built in Thailand, the US and Malaysia.

BMW and Audi also have assembly plants in India which have been operational for more than a decade. Currently, BMW produces eight models from its Chennai-based plant. The A6 sedan is one of the models assembled by Audi from the Aurangabad plant in Maharashtra.

‘AMG footprint can be further expanded’

Speaking to Moneycontrol, Martin Schwenk, managing director and CEO, Mercedes-Benz India, said: “We have seen that the AMG has done very well in the performance segment in the last couple of years. We believe that there is a big possibility to further expand the footprint of AMG, and, at the same time, make it acceptable to the broader audience”

“That is why we thought of localisation of the AMG brand, and so we launched the GLC 43 Coupe. It is a product which would cost around Rs 1 crore (if fully imported), but after localisation, it comes at Rs 76.7 lakh,” added Schwenk.

Import duty on fully built cars in India has two slabs -- 60 percent and 100 percent, depending on the value. For partially assembled units, the import duty is 15 percent and 30 percent.

Sourcing engines from Force Motors of Pune, Mercedes-Benz was already assembling 10 products in India, including the C-Class, E-Class and Maybach. The eight AMG cars imported by the carmaker reported a growth of 54 percent during 2019, compared to 2018. Mercedes did not share absolute volume figures of the AMGs.

“We are thinking of taking this further with the A-Class Limousine when we launch the car in India and the AMG version of that. In principle, that is doable. We would be able to increase the portfolio size with that launch,” added Schwenk.

More investments

Mercedes-Benz stepped up investments in India over the last two years, despite poor demand conditions. The investments went into localising more products and fine-tuning the assembly plant.

“In the last 12-18 months, we invested Rs 400 crore in India, and that is mostly for preparing for the production of new models GLE, GLS, GLC and now AMG. In future, the entry segment A-Class and GLA will also be produced. In total, we have invested Rs 2,600 crore in India so far. We are continuously expanding our portfolio. We now build 11 models in India,” added Schwenk.

In 2019, Mercedes-Benz clocked sales of 13,786 units in India, a drop of 11 percent compared to 15,538 units in 2018. But the company believes that demand for luxury cars in India is bouncing back and that is visible from the traction seen during the Navratri and Dussehra period. The company sold 550 cars during the 10 days.