Mercedes Benz loses market share in India: Plans to assemble cars in the country

Mercedes Benz, the automotive luxury class manufacturer from Germany, has admitted that there has been a substantial loss in the company’s market share as far as India is concerned. Mr. Peter Honegg, Managing Director and CEO of Mercedes India acknowledged that it has lost its top position and comes second to Audi in India. The leading player is BMW with a total unit sale of nearly 9,500 as compared to Mercedes Benz unit sales of approximately 7,450. Audi sales are approximately 5,500 units in the country annually.

The problem attributed to the loss in market share is the government policy in high import duties when cars are directly imported. A whopping 110 percent is levied on car imports and only 30 % if cars are assembled in Indian plants. Mercedes Benz has learned its lesson and is now planning on assembling its cars at the Chakkan plant in Pune. Mr. Honegg has clearly understood this ball game and is reportedly stated that for the next three years, eight to nine of its luxury models would be assembled in its India plant from a semi-knocked down stage. Clearly, Mercedes Benz is keen to take the competition head on and regain its market share quickly.

Mercedes Benz looses market share in India

Assembling cars in India for Mercedes Benz is not new as the Mercedes C class, S class and E class are already being assembled here in the country. One questions the wisdom of the management in importing cars directly and thus invoking higher tax duties. The Mercedes GL, B class, A class and the GLC series are most certainly going to be assembled and hence the on road price to the consumer will be reduced and an expected sales growth could be forecast. The assembling of these models comes with an additional investment of nearly Rs.350 crore by Mercedes Benz which would include a paint shop as well.

Mr. Honegg is optimistic and has proclaimed that the company has already received bookings of nearly 100 cars for the ML class models and hopes to sell another 500 units this year. Incidentally, the ex-showroom price of this model is just under Rs.60 lakhs.

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