PUNE: As Tesla dithers in doing local assembly in India, German rival Mercedes-Benz is going big on its India engagement and has decided to locally-make its most advanced cars – the S-Class Maybach and the EQS electric.
The company, which has invested Rs 2,600 crore in India, currently assembles 13 of the 25 cars that it sells in the country at its factory in Pune where it started operations in 2009.
“And more will follow,” Martin Schwenk, the MD & CEO of Mercedes-Benz in India, told TOI as he spoke about greater engagement in India – including car assembly and local investments — to keep costs competitive and avoid the high import duties.
The company on Thursday drove in Maybach S-Class limousine in India through local assembly, and the Made-in-India will cost upwards of Rs 2.5 crore (ex-showroom Delhi).
Mercedes employs around a 1,000 people at its factory in Chakan, on the outskirts of Pune, and Schwenk said that manpower will be added as sales pick up.
“At our peak, we sold around 15,500 cars in India in the year 2018, before economic slowdown and the corona pandemic impacted the broader industry, including us. However, demand has picked up since and we expect the numbers to start picking up strongly once again.”
In 2021, the company sold 11,242 units at a growth of 43%, though the final numbers were impacted by the shortage of supplies as semiconductor woes across the world impacted deliveries to India as well.
Schwenk said that “demand remains strong”, and added that shortage in supplies has resulted in long waiting across some of the company’s models.
Speaking about localization, he said that the company had taken a conscious call to start deeper operations in India. It currently assembles models such as A sedan, GLA, GLC and GLS SUVs, C-, E- and S-Class sedans, and even the high-performance AMGs which were added in November 2020.
“And it is a credible assembly operation that we have here, complete with a body shop, paint shop, and welding. In fact, the installed capacity that we have here can go up as many as 40,000 cars annually. This speaks highly about how committed we are to the Indian market and local manufacturing here.”
However, Schwenk said that slower-than-expected development of the luxury market in India – it closed last year at around 30,000 units – has stopped companies from going deeper with a thorough manufacturing set-up. “We need more volumes, and we need individual models to do at least 30,000 units or so to look at complete manufacturing operation for them. Only then can we think of having committed component suppliers here, and even of exports.”
On the issue of Tesla, Schwenk said that Mercedes-Benz welcomes more competition, but added that “there should be a level-playing field for all”.
“If any new entrant gets some benefits for any fresh investments that they are making, the government should also take into account the investments that we have made in India so far. No special dispensation should be accorded for one single company. Any benefits should be open for the entire industry.”