Mercedes maker mulls mini model

Daimler, the parent company of Mercedes Benz, one of the world’s largest selling luxury automakers, is planning to launch a compact car in India based on the Smart range.

France’s Renault and Japan’s Nissan will provide technical assistance to alter and modify the basic design of Daimler’s Smart — a two-seater, featured in the movie The Da Vinci Code — to suit Indian conditions and needs.

According to a senior Mercedes Benz India executive, the Smart will be an important launch for the company in India, where demand for upper-end compacts has surpassed growth in most other segments.

Daimler sells a two-seat model under its brand in North and South America, Europe and Asia. However, the Indian version will probably have five seats and is expected to be priced competitively against vehicles in the A2 category (compacts), where prices range from Rs 3 lakh (Maruti Suzuki Alto) to Rs 7.5 lakh (Honda Jazz). In the US, the Smart sells for $11,540 (Rs 5.3 lakh).

In an interview with Business Standard, the newly-appointed Mercedes Benz India Managing Director & CEO Peter Honegg said though his company doesn’t currently sell anything below the C-class sedan, priced at Rs 28.44 lakh, it will definitely look at the compact car market.

“We are thinking in that direction. Definitely, (the Smart) is a very interesting product. The compact car segment is very competitive. It’s far below all our Mercedes models, and is a segment we haven’t touched, but which most of the competitors are very serious about in India,” said Honegg.

A2 segment sales – it includes the Maruti Swift, Ford Figo and Volkswagen Polo -- posted growth in India of 30 per cent in April-December at 1.04 million units.

Daimler joined hands with Renault and Nissan last year to forge synergies in areas such as product development, sharing and developing engines. The agreement was forged by Daimler primarily to mount a serious assault on the compact car market, where both Renault and Nissan have better expertise.

According to Honegg, Daimler has already started building a prototype of the next generation Smart, which should be launched in a couple of years. Emerging markets such as India could give it a much-needed fillip through volumes, believes Mercedes.

“The Smart brand name is not recognised in India yet. Looking at the quality of roads here, we will look very closely at the Smart for India. I have seen a possible prototype; it needs a lot of work,” Honegg added.

Demand for the Mercedes brand globally has been under pressure, and it recently slipped to the third spot after BMW and Audi. In India, too, Mercedes failed to reclaim pole position from arch-rival BMW, which outsold Mercedes in 2010.

Daimler will have to plan a full manufacturing facility for the compact car in India, which will be a departure from the completely knoc-ked-down kit assembly operation carried out at its Mercedes facility in Chakan, Maharashtra.