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Luxury carmaker Mercedes-Benz on Monday said it is expecting flat sales in India during the current calendar year due to uncertainties surrounding the pricing post-implementation of the Goods and Services Tax (GST) and the impact of the ban on diesel cars in Delhi.
Though the ban on diesel cars in the national capital was lifted in August, the company has not been able to recapture the lost volumes, said Roland Folger, Managing Director and CEO, Mercedes Benz India, at the inauguration of company's second dealership in the Telangana state capital.
He told reporters here that the situation could have been worse with a degrowth but they were hoping to end the year with flat sales.
The German automaker sold 13,502 vehicles in 2015 and it is expecting the same volumes during 2016. It has sold 9,927 cars in the first three quarters.
He said that though the sales volume grew by 12 per cent in the July-September quarter over the April-June quarter, year-on-year growth was expected to be flat.
He said there were uncertainties about whether prices of luxury cars will increase or come down post-GST. Similarly, the company is also waiting for the government to come out with the norms relating to diesel cars.
"This is bringing certain uncertainty to our overall planning but we are trying to deal with it the best way possibly we can," Folger said.
Mercedes-Benz has invested Rs 1,000 crore in its Chakan plant over last 10 years to have installed capacity of 20,000 vehicles per year. The current capacity is sufficient to address the demand for next one to three years.
"We are future ready in the sense that with a small step by investing in people and going for two-shift model, we can double the capacity," he said.
Folger said they believe in continued growth in Indian market as they see additional volume potential in the luxury segment.
The segment witnessed 28 per cent growth last year with total sale of 38,000 vehicles.
Referring to the ban on diesel cars in Delhi, he said that after the matter was settled with payment of one per cent environmental charge, there was expectation that the market will swing back fully and "we will recapture all lost volume sales but that has not happened".
He said there had been no dramatic shift towards petrol cars. "Customers are not rushing away from diesel but the issue is that lot of customers are waiting to see what the government decides."
Stating that they voluntarily came forward to pay one per cent environmental protection charge from their pocket, he said it was wrong to see them as polluters.
"We are fulfilling all standards. If standards are wrong, somebody needs to address them," he said.
Folger said Mercedes-Benz was committed to launching its first vehicle with Bharat stage VI in 2018 if the required fuel was available in the market. The company is also ready to switch the whole fleet to Bharat Stage VI by the end of 2018.
This will address the whole issue as emission levels for both petrol and diesel versions would be same, he added.
The company has already launched eight products this year and will be rolling out four more by the end of the year.
Silver Star, the dealership opened in Hyderabad, is the seventh outlet of the carmaker in the country this year and three more will be added by December.
On the inaugural day, Silver Star delivered 30 Mercedes-Benz cars in Hyderabad. "This is something unheard of and goes on to show the demand in the city which contributes five per cent to our national sales," he said.
Amith Reddy, Managing Director, Silver Star, said they invested Rs 37 crore on the showroom and workshop, spread over 20,000 sq ft and 50,000 sq ft, respectively.
This is Mercedes-Benz's 87th outlet spread across 40 cities, making it the densest network in the country for any luxury car brand.