Mercedes to begin local assembly of AMG-branded hyper cars in India

Key Highlights

• Local assembly of completely knocked down kits reduces import duty from 110 to 16.5%
• It will enable Mercedes to offer AMG portfolio at affordable prices resulting in higher sales
• Local assembly to begin with the GLC 43 Coupe that will be launched early next month.
• Mercedes sells a little over 500 units every year of its AMG and speciality product line-up
• Mercedes already produces 10 CKD models across segments in its facility in Pune
• It has a product line up of 8 AMG models of high-performance vehicles
• The top of the line AMG GT Coupe costs Rs 2.48 crore

India's biggest luxury carmaker Mercedes Benz on Tuesday announced it would begin local assembly of its hyper performance cars branded under the AMG logo beginning with the GLC 43 4matic coupe.

Luxury cars that are imported into the country as completely built units attract high duties of 110 per cent but assembling them as completely knocked down units (CKD) brings down the taxation to just 16.5 per cent. This will enable Mercedes to price the cars much lower, enhancing the affordability of them and resulting into much higher sales of these cars.  

"The AMG brand over the years has become synonymous with performance motoring in India and remains highly aspirational. The decision to locally produce AMG in India underlines Mercedes-Benz's clear roadmap for the Indian market and our long-term commitment to our Indian customers," said Martin Schwenk, Managing Director & CEO, Mercedes-Benz India. "We want AMG to be more accessible to the potential customers and play a bigger role in our overall portfolio we offer in India. This decision is an important milestone towards strengthening our AMG ambitions in India further."

The earlier version of the GLC 43 coupe was on sale till the end of 2018 and was priced at Rs 78 lakh (ex-showroom). Its facelifted version which will have many additional features especially in connectivity options and a BS VI compliant engine is likely to be priced around the same level. The benefit to consumers due to CKD would be to the tune of Rs 20 lakh as the new version would have cost around Rs 1 crore today under the fully imported CBU route.   

"The AMG GLC 43 4MATIC Coupe is an important model in our portfolio having the distinction of being one of the highest selling AMG models in India. We are proud to introduce this dynamic SUV Coupe for our Indian customers now in its 'made in India' version. The addition of the stylish AMG GLC 43 Coupe will further cement our strong position in the performance SUV segment," Schwenk added. "We are confident, the launch of the locally produced AMG GLC 43 4MATIC Coupe will drive in value and aspiration for our customers and help the dynamic SUV Coupe retain its top preference among the discerning AMG customers."

The AMG cars would be assembled at Mercedes' Pune factory which has a capacity of 20,000 units per annum. As of today, it assembles 10 of its non-AMG products in the country.

"Our production facility, is a global benchmark in quality and technological advancement in manufacturing, and remains the backbone of our growth story in India. We are highly excited to commence the local manufacturing of AMG in India as it will add a new production milestone in our India journey, further deepening our commitment to the Indian market," said Piyush Arora, Executive Director, Operations, Mercedes-Benz India. "The decision to commence localisation of the AMG GLC 43 4MATIC Coupe firmly reiterates our significant manufacturing prowess and innovation in manufacturing, developed over We are glad to offer world-class products to our Indian customers with substantial local value addition, in the shortest possible time."

Mercedes has been India's largest selling luxury brand for the last 5 years. It has however found it tough to grow in the last few years in line with the overall sentiment in the market. In 2019, it notched up sales of 13,786 units which was 11.3 per cent lower than in 2018.

Overall industry volumes have remained range-bound in the 35,000-40,000 unit per annum band since 2015 and is significantly lower than earlier projections of about 100,000 units by 2020. Luxury cars account for just 1 per cent of overall industry in India as against 4-6 per cent in other emerging markets.

The pandemic has only made matters worse and this segment is staring at a near 50 per cent decline in 2020 over 2019, which itself had declined by 13 per cent. In the first 9 months of this calendar year, it managed to sell 5,007 units, which was around 50 per cent less than last year.   

Also Read: Consumer durable firms expect 15% more festive sales; not enough to undo COVID-19 blow

Also Read: Unemployment rate in urban areas drops to 8.4% in Q2FY20

Also Read: BT Insight: Income tax on gold bonds, jewellery, ETFs, funds and digital gold