Localisation in cars beyond the knocked-down assembly business model and setting up a car body parts manufacturing factory in India requires six-digit sales, a top Mercedes Benz India official said on Wednesday.
"To set up a factory producing body parts needs at least six-digit numbers of a single model in a year, at least a lakh," said Eberhard Kern, managing director and CEO of Mercedes Benz India at the inauguration of the company's third showroom here.
"The business model we follow in the manufacturing is the knocked-down assembly model. Localisation on average is around 50 percent and the models where we do the body and painting here, it is up to 60 percent," said Kern.
The maximum level of localisation is 60 percent in the knocked-down approach, where engines, axles and dashboard besides the car are assembled and for some models body and painting, he added.
"The next level would be to produce the parts locally, therefore you have to bring in the suppliers to set up their plants here. But this is depending on volumes and the luxury car business in India right now doesn't have volumes," said Kern.
Currently, Mercedes Benz brings parts in containers from global suppliers who can only be convinced to set up shop if there are volumes.
Kern said car companies like Maruti have the volumes but not luxury car-makers in India.
The entire luxury car market in India in 2014 was 33,000 units, an increase by just 1,000 cars from 2013, said Kern.
He exuded confidence that the sales in 2015 would cross 40,000 units.
Kern said the company sold 3,566 cars in the first quarter of 2015, a rise of 40 percent from the previous year.
Mercedes Benz plans to launch 15 new models in 2015. It has already launched six new models this year.
The newly launched models are the CLA Class, C220 CDI, new B-Class, E-Class Cabriolet, CLS 250 CDI and the S600 Guard.
