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The company, with the three-pointed star logo, believes there is a huge unmet demand in India for compact luxury cars, thanks to lack of options below Rs 30 lakh.
A senior company official said two of every five cars sold by Mercedes-Benz by 2015 would be a compact car. The company at present has the A-Class and B-Class hatchback segment, both of which are priced below Rs 25 lakh.
Eberhard Kern, managing director and chief executive officer, Mercedes-Benz India, said, “The new gen cars and the A- & B-Class are a part of this, they would contribute to a significant volume. There is more to come, there would be a luxury compact SUV and a luxury compact sedan based on this platform. This would be roughly 40 per cent of the total sales.”
The company launched the diesel variant of the B-Class in India priced at Rs 22.6 lakh (ex-showroom, Mumbai) 10 months after it launched the petrol variant of it. Five hundred units of the B-Class have been sold in India already.
The competition
BMW kick-started the drive in the affordable luxury segment when it launched a locally assembled X1 SUV a few years ago. Audi followed with the launch of the Q3 SUV last year. BMW intends to add the 1 Series car later in the year, while Audi too is keen on adding to its portfolio in this segment.
“The A-Class was launched in May end. The initial response has been unbelievable, it is a history-making car. We never collected so many bookings in the first few days of the launch. Unfortunately, we have built up a waiting list for the A Class of two months,” added Kern.
Both the A- and B-Class are imported into the country as fully built units and would be continued to be imported till the time Mercedes has finalised plans to locally assemble them. Currently, the C-Class, E-Class, S-Class and ML-Class are made at the Chakan, Maharashtra, facility. The GL-Class would be made at the plant from next month. “We are investing Rs 250 crore in the plant to double the capacity to 20,000 units from 10,000 now. By the end of next year, we would decide which new models are to be manufactured there,” added Kern.
Weak rupee
The fall in the value of the rupee is hurting luxury car companies. While Audi has signalled an increase in prices by up to four per cent, Mercedes is also contemplating a hike in the coming days. The company, however, has not finalised anything yet.
“The weakness of the rupee is worrying us. We follow a hedging strategy means there is immediate action needed, but every hedging period comes to an end. If it continues like it is right now, then of course, we would have to look at our prices. We cannot compensate 10-12 per cent fluctuation in exchange rates,” added Kern. Thursday’s launch is the fifth launch by Mercedes-Benz India so far this year. Last year, the company achieved sales of 7,138 units and hopes to grow in 'double digits' this year. More products are planned for the second half of the year.
