Mercedes Benz to Increase Localisation Content to Improve Sales and Reduce Costs

The Indian luxury market is one of the fastest growing markets in the world, with many global luxury manufacturing companies entering India, this year itself. One of the oldest luxury auto companies in India, Mercedes Benz is looking forward to expanding their portfolio of cars manufactured locally for reducing costs and increasing volumes.

Mercedes Benz India’s CEO and MD, Peter Honegg, was quoted as saying that they are looking forward to producing some of their highest selling CBUs locally. They will begin with their popular M Class car that has received a great fan following in India. In the next couple of two to three years, they plan to bring their B Class and A Class luxury hatchbacks to the Indian auto market.

The company that currently produces the S, E and C Class models in India, has managed to sell around 327 models of the ML 350 cdi priced above INR 55 lakhs in India in the period of January to June. The company is also contemplating launching the Smart car, which is being developed by Daimler for their European auto market in collaboration with Nissan and Renault.

They have however, not yet decided the pricing for their Class B and A hatchbacks. In their UK market, these cars are available for INR 12 lakhs to INR 18 lakhs for the on-road variant. These would the cheapest priced cars from Mercedes. They however do not offer any car below the C Class, with a price ranging from INR 26 lakhs to INR 33 lakhs, according to ex-showroom prices in Delhi.

The company’s director of human resources and corporate affairs, Suhas Kadlaskar, was quoted as saying that as the volumes rise, they will look forward to increasing the value addition locally for their existing models as well. They so far have six suppliers that they source auto parts from, largely for their Class E and C models.

In the case of Class E and C models, the content of localisation ranges from 40% to 50%. Mercedes is also making an investment of INR 250 crores for opening a paint workshop that will be operational by next year’s second half, for increasing the levels of localisation.

The company managed to sell around 3,798 models in the January to June period, a growth of 58% in comparison to the 2,402 models sold in the same period, a year ago. Meanwhile, the sales of its competing company, BMW were around 4,524 models in the period of January to June.

One Reply to “Mercedes Benz to Increase Localisation Content to Improve Sales and Reduce Costs”

  1. Long back Mercedes Benz arrived in India. “By this time, Mercedes Benz should have used locally manufactured parts (except Engine assembly) for their cars for reducing costs and increasing volumes.”

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