High-end cars in high demand but supply a huge issue: Mercedes India MD-CEO

Mercedes' new generation imported and locally assembled Maybach goes on sale in India

Buyers of high-end luxury cars (those with an ex-showroom price of Rs 1 crore and above) are lapping them up with such models getting sold out for the year even before they go on sale.

However, even as the demand remains strong the global instability triggered by the war in Ukraine is set to compound the supply side issues, said Martin Schwenk, MD and CEO, Mercedes Benz India.

Auto firms have been grappling with supply related disruptions ranging from shortage of semiconductors and auto parts to containers, he said. With global instability, the supply side factors would have to be monitored carefully over the next few months, he pointed out.

“While I cannot tell you the economic impact of the war in Ukraine, I can say that it would further de-stabilize the supply chain,” Schwenk told Business Standard.

On Thursday, the luxury car market leader launched the locally assembled Maybach for the Indian market. While the price of the Maybach S-Class 680  starts from Rs 3.2 crore the ‘Made in India’ Maybach S-Class 580 is priced at Rs 2.50 crore (all India ex-showroom prices)

“There is a desire to own high-end vehicles and the market is growing,” said Schwenk alluding to the S Class and the AMG range, S-Class has been very popular and the market is developing. Mercedes sold 11,242 cars and SUV in India in 2021. Of this, high-end models (those priced at Rs 1 crore and above, ex-showroom) which includes the Maybach and the AMG range accounted for 20 per cent.

The number of ultra-high-net-worth-individuals having net assets of USD 30 million (about Rs 226 crore) or more, in India increased 11 per cent last year on the back of buoyant equity markets and digital revolution, according to Knight Frank. India also ranked third in billionaire population globally in 2021.

The Maybach is the 13th out of 25 models sold in India to be made in India. Mercedes has been making product specific investments in India. It has pumped in Rs 2,600 crore in the last two to three years.

Commenting on the outlook for the current year, Schwenk said given the current scenario it’s difficult to estimate and foresee what’s coming. “I can only say that this would be one of the better years for us.”

There are too many moving parts when it comes to supplies, he said. The semiconductor availability remains a concern.  Plus, there are capacity issues at various levels of suppliers. There is a gap in air freight and containers. All of these have been delaying deliveries, he said. If that wasn’t enough the war is only set to complicate things further, he pointed out.