Mercedes gets back in form as sales soar

Mercedes-Benz is on a roll in India with sales of over 3,566 cars recorded in the first quarter of this year. The momentum continued in April where numbers were up by more than 50 per cent in the same period last year. Going by the present scorching pace of growth, the company is well placed to surpass last calendar’s sales tally of 10,201 units.

Mercedes is now gearing up to double capacity at its Chakan plant near Pune to 20,000 units at a cost of Rs 1,000 crore while expanding its portfolio past the 30-unit mark by the year-end through local production and direct imports.

“We are future ready,” declares Eberhard Kern, Managing Director and CEO. “We have a strong manufacturing presence which is set to double soon while localisation has gone up to 60 per cent. The year 2015 and beyond will only get better.”

The focus on new models, higher capacity and local content is part of the Make in India strategy. Incidentally, this is true for parent company, Daimler’s truck and bus business where vehicles produced at the Chennai head out to other parts of the world.

Kern was recently in Hyderabad with Boris Fitz, Vice-President, and Guido Brormann, Market Management, Mercedes-AMG. At present seven AMG models are on offer in India with one more likely soon. Hyderabad saw the opening of the fourth AMG centre followed by one more in Pune taking the total number of these centres past the 400 mark globally.

Last year, three AMG centres were opened in India in as many days, the fastest anywhere in the world. Likewise, this calendar has already seen two more added to the kitty in two days.

With AMG, Mercedes has ushered in the made-to-order culture where its discerning luxury car buyers get to speak what they want in a car which is then customised for delivery. They even get to visit the Chakan facility as part of the bonding exercise. The AMG private lounge is an exclusive owners’ community for interactions and sharing experiences.

Kern, who has played a key role in the India turnaround story, is upbeat on the road ahead especially with the Goods and Services Tax hopefully coming into force soon next year. “The Chinese luxury car market was where India is now about 10 years ago. Russia, Taiwan, China and India are different in their own ways,” he says.

The Indian luxury car market accounts for just about 1.3 per cent (33,000 units) of the 2.4 million units sold per annum. Last year saw a growth of barely 1,000 units over 2013. The sports car and performance brand Mercedes-AMG posted record sales of 47,632 units in 2014.

Going forward, it is very likely that the luxury car pie will grow as companies like Mercedes (along with BMW and Audi) increase their localisation focus which could make some top-class brands more accessible. Further, once the economy picks up growth in the coming months, it will gradually translate into higher disposable income levels.

As a result, people will be inclined to go in for these luxury car brands.

Mercedes has increased its dealerships to 72 and has targeted 80 by the year-end with non-metros being the focus of the expansion drive.

For the moment, six of its 21 models account for over 80 per cent of sales. “We are not in the numbers game but keen to strengthen our presence in the medium to long term,” says Kern.