Reference Auto

The compact car fever has also gripped iconic luxury car maker Mercedes-Benz, which wants to compete in India’s medium cars segment by rolling out its A- and B-Class cars in the country next year.

The cars would be left-hand drive and roll out later this year in Europe and would take another year to make it to India, according to Mercedes-Benz India managing director and CEO Peter Honegg.

Even after being in the compact cars class, Mercedes-Benz models could be priced substantially higher than its peers but if one looks for quality, Merc could offer a person the best of that. However, the company has been tightlipped on pricing.

“In the beginning, the cars will be left-hand drive and will be made at our facilities in Germany. It will cater to the European market. A year later, we will bring them into India as completely knocked down or CKD units.”

He added, “Currently, we don’t have the facility to make the compact class cars at our Chakan facility near Pune.”

At present, Mercedes-Benz India makes the C-, S- and E-Class cars at its Chakan plant.

He said Mercedes hopes to register sales of over 7,000 cars this year compared with last year’s 5,800.

The luxury cars space has become crammed in India, with Maserati, Audi, BMW, Rolls Royce, Bugatti and Bentley’s inundating the country’s market with their offerings.

This has led to an oversupply of such cars and could take a toll on sales growth, which was once thought to be near about 70 to 80 per cent. Here, even as some companies survive, others may have to shut shop after a while.

Honegg said Mercedes-Benz pumped in Rs 400 crore to shore up the paint shop at the Chakan plant, which has a capacity of 20,000 units. “Our unit, while operating in two shifts, has a capacity of 10,000 units. By next year, it is slated to double, and may be, it will touch 40,000 in the next few years,” he said. 

He revealed there are 30 dealers in India and would ramp up dealership in cities such as Delhi, Mumbai and Chennai.

On sale of its Actros brand of buses, he said the company hopes to sell 140 buses this year compared with 70 in the previous year. He said financing of Mercedes-Benz buses would be done by the newly-launched finance arm of Daimler Financial.

Mercedes-Benz Financial would look after financing options for cars and Daimler Financial will handle the financing of its commercial vehicles arm, Bharat Benz, which will be launched next year.

In order to shore up sales, Mercedes-Benz is also planning to lease cars in India and the leased cars will come for 50 per cent of the original price. The time period of lease will be three to five years.

Honegg revealed the company will initially eye public listed companies, and later on, individuals.

About 30 per cent of Mercedes cars (globally) are leased today and India is a nascent market which offers adequate opportunities, he said. With its move to lease cars, Mercedes-Benz could see volumes spurt manifold with the pricing and will help the company scale up earnings substantially.

The A- and B-Class cars will not fall in the category of compact cars in India. In the UK, the A- and B-Class cars come for between Rs 12 lakh and Rs 18 lakh and will compete with the likes of the Honda Civic and Toyota Altis.

The Mercedes-Benz A- and B-Class cars could sell well and drain the Civic and Altis market quite a bit as those wishing to pay around Rs 15 lakh could want to be proud owners of a Mercedes-Benz.