Mercedes starts local assembly of AMG models to make them affordable

As compared to a fully imported model, the local production makes the model cheaper by Rs 25 lakh

A decade after Mercedes-Benz introduced its range of performance cars under the AMG stable in India, the company has started the local assembly of the GLC AMG 43 locally as part of a larger strategy to make performance cars more affordable. Compared to a fully imported model, the local production makes the model cheaper by Rs 25 lakh.

The company plans to assemble more AMGs locally. The move will help the firm grow its overall volumes at a rapid pace in India, said the company’s top executive. Mercedes has invested Rs 400 crore in the last couple of years for local assembly of models.

With this, the luxury car market leader will be producing the new-generation cars, sedans, sport utility vehicles (SUVs), and AMG performance cars at one facility, the company said in a statement. Mercedes’ facility near Pune has an annual installed capacity of 20,000 cars.

“The technologies, market trend, and customer requirements are changing rapidly and we have kept pace with the changes. The AMG models have been seeing good upswing in demand and it made sense to make them affordable. Commencing local assembly is a step in that direction,” said Piyush Arora, executive director-operations, Mercedes-Benz India.

The local production of the GLC AMG makes it cheaper by Rs 25 lakh, he said. India levies 102 per cent import duty on cars that come into the country as a completely built-up unit. Priced at Rs 76.7 lakh, the GLC is powered by 3-litre V6 bi-turbo engine that produces 390 horsepower, or hp (287 kilowatt, or kW), 23 hp (17 kW) more than the previous model. It comes with a choice of five drive programmes: ‘slippery’, ‘comfort’, ‘sport’, ‘sport+’, and ‘individual’.

Mercedes has launched 10 new models for the Indian market this financial year. Of these, five — the latest being the GLC AMG Coupé — are from the AMG stable. This underscores the criticality of the brand for the company, says Arora.

Cars under the AMG brand grew over 54 per cent in 2019. The market size of such performance cars is 900-1,000 units per month and Mercedes accounts for half the market.

Mercedes introduced the AMG range in India a decade back, but started considering local assembly after volumes started showing good traction.

Meanwhile, touching upon the impact of the recent quality audit order that makes it mandatory for manufacturers to get a Bureau of Indian Standards certification for imported parts and aggregates, Arora said it will have an impact on the timeline of launches and may lead to some delay.

Mercedes continues to be in dialogue with the government through the industry body Society of Indian Automobile Manufacturers on the issues. “If nothing happens, we will have to live with it,” he said.

India’s luxury car market — which accounts for less than 1 per cent of total passenger vehicles sales — has been battered by the Covid-19 pandemic. Sales, however, have started looking up with the onset of the festive season.

Mercedes-Benz India sold 5,007 cars and SUVs in the nine months to the year, posting 49.5-per cent year-on-year decline.  For the first time since the outbreak of Covid, the company’s September sales reached pre-lockdown levels, pointing to recovery in sales and a strong buyer sentiment.

The E-Class sedan continues to be its highest-selling model, followed by C-Class sedan, while the GLC is the highest-selling SUV.