Mercedes Benz to double its investment in India

German luxury car maker  Mercedes-Benz has decided to increase its investment to US$ 181 million by 2014. The German car maker has already made an investment of over US$ 101 million  spread across its 31 showroom and 41 service outlets located in 31 Indian cities.
Mercedes Benz launched its operations in India in 1994 and in 2009, the company opened its production facility spread over 100 acres in Chakan. Mercedes-Benz India is currently setting up its own technologically advanced paint shop, which will be operational by October, 2012. The new paint shop will have an annual capacity of 20,000 units.

Mercedes-Benz India locally manufactures its flagship sedans the C-Class, the E-Class and the S-Class sedan in its Chakan plant near Pune. Mercedes-Benz India ‘s sales reportedly fell nearly 24 per cent to 1,633 units during April-July, compared with 2,141 units sold in the year-ago period.

“The rupee has had a terrible impact on the company. We are close to catastrophic mood means we are cutting costs wherever possible, our guys are flying economy (class), we are going to cheaper hotels, we are cost cutting wherever possible,” a news report quoting Peter Honegg, Managing Director and Chief Executive Officer, Mercedes-Benz India, said.

The report said the company is forced to absorb Rs.3 of every jump of Rs.10 in prices to avoid impacting retail demand which has been under pressure. In order to counter BMW and Audi’s rise in volumes riding high on the back of demand for cheaper sports utility vehicles (SUVs), Mercedes is also gearing up to launch a compact SUV in 2014-15 in India.

Besides, the German company has also opened its first showroom in Lucknow, the first such dealership by a luxury car maker in Uttar Pradesh. The luxury car maker is expanding its footprint to Tier-II cities despite facing a stiff competition from rivals BMW and Audi. The company has recently launched such dealerships in Indore (Madhya Pradesh) and Karnal (Haryana), plans to sell 50 cars by December through the Lucknow dealership, ‘Smart Hoops’, and double the sales in 2013.

Mercedes E Klasse, assembled in Pune, India