German luxury car maker Mercedes Benz is increasingly looking at widening its portfolio of products manufactured in India to cut costs and shore up volumes.
“We are looking at producing some of our best-selling CBU (completely built unit) cars locally,” said Peter Honegg, managing director and chief executive officer of Mercedes Benz India Ltd (MBIL).
“We will start with the M Class which has been accepted well by our customers in India. In two-three years, we would bring in A and B Class premium hatchbacks to India,” he said. Mercedes, which currently produces the C, E, and S Class models here, sold 327 units of ML 350 cdi, priced upwards of Rs 55 lakh, between January and June.
MBIL would also consider introducing small car Smart, which Daimler is developing for the European market in association with Renault and Nissan.
It is yet to determine the pricing points for A and B Class hatchbacks. In the United Kingdom, A and B Class cars are priced between Rs 12 lakh to Rs 18 lakh (on-road). The cars would be the cheapest offerings from the MBIL stable. The company does not have any product below the C Class, priced between Rs 26 lakh and Rs 33 lakh (ex-showroom, Delhi).
According to industry estimates, around 21,000 luxury vehicles are expected to be sold in India in 2011. This is slated to increase by almost 10-fold to 200,000 units over the next 10 years. Luxury car makers like BMW and Audi have also been looking at introducing smaller cars to speed up sales. While the BMW I-Series is expected to hit Indian roads by 2012-end, Audi has initiated a market study to introduce A3 and luxury SUV Q3.
“As volumes grow, we will look for increased local value-addition on the existing products as well. We have developed a base of six suppliers from whom we source components largely for the C and E Class models,” said Suhas Kadlaskar, director, corporate affairs and human resources, MBIL.
Incase of the C and E Class models, the localisation content ranges between 40 to 50 per cent. The company is investing Rs 250 crore to set up a paint shop, which would be operational by the second half of the next year, to increase localisation levels.
MBIL sold 3,798 units between January and June, 58 per cent more than the 2,402 units sold in the corresponding period last year. In the first six months of this year, BMW’s sales were higher at 4,524 units.