Mercedes Plans to Assemble M-Class in India

As the Indian auto markets faces an increased luxury SUVs demand, luxury car manufacturer Mercedes Benz is reportedly planning to assemble their first SUV model in India. This will be their M-Class model, which is slated to begin production at their Chakan plant located near Pune, by the end of the year.

This move by the German car manufacturer will help it add increased volumes by more aggressive pricing to stave off competition for their rising rivals BMW. Two years ago, Mercedes had lost their premier position to BMW by just a slight margin. Mercedes already assembles their compact X1 SUV at their Chennai plant. They are also planning to assemble their X3 model, here as well this year, as Audi produces their Q5 at their Aurangabad plant from its knocked-down units.

A senior official at the company was reported as saying that assembling their M-Class SUV is just another step in bringing more models to their Indian assembly. They are also looking forward to beginning a new local assembly for engines in the next year.

The M-Class SUV managed to sell 104 units this year in March, which is a record high for the model. Local production can help the luxury car maker avoid the high 60% Customs duty which it currently pays for importing CBU. In comparision, importing knocked-down kits, where the transmission and engine have not been pre-assembled has a lower Customs duty of only 10%.

Currently Mercedes assembles its S, E and C-Class sedans over here; however they have not yet assembled any SUV on Indian soil. Whereas other convertible and coupe models and variants like the GL and M-Class SUVs, R-Class, CLS-Class and the G 55AMG are concerned, they are imported to India as CBUs.

The CEO and MD of Mercedes Benz India, Peter Honegg, said that their Mercedes plant has a current capacity of producing 10,000 units per annum, which is expected to be utilized completely this year, depending on whether the market performs as well as it did last year. In 2010, the sales of Mercedes grew by 80%, selling 5,819 units. The company has an instant expansion plan to produce over 20,000 units over the next couple of years, in spite of it having enough land to increase the capacity if required.

Their strategy to begin assembling the M-Class SUV follows the recent doubling of this market over the last year in India. The X1 from BMW dominates the luxury SUV market which helped to significantly increase the sales volume of the company for the January to March period with 338 units sold. Among the bigger SUVs, the Q7 and Q5 from Audi have done well whereas companies like the Volvo and Land Rover are gradually reaching there.

Honegg also said that their X1 challenger could arrive by 2012-14 in India, around the same time B and A Class compacts are to be launched. Their GLC compact SUV is to reportedly share the engine and platform as these cars. The GLK model which is a competitor to the X3, from BMW could be launched in the coming three years.

Honegg also stated that at the moment, there is no right-hand drive variant of GLK available, as a result of which Mercedes will have to wait before the next generation of the model is developed. Overall, Mercedes sold around 2,135 units this year from January to March, while BMW managed to lead the luxury segment with a slight gain of 2,147 units, with Audi coming in at number three with a sale of 1,611 units.