Mercedes S-Class price cut by Rs 21 lakh as local assembly starts

Mercedes-Benz India started local assembly of its latest model S-Class (S-500) at the Pune facility and slashed the price of the super luxe sedan by up to Rs 21 lakh as it seeks to boost last year's growth momentum, when sales soared 32 per cent.

The local assembly from the Chakan, Pune facility, with up to 40 per cent local sourcing, comes almost three months ahead of schedule as the company saw a "tremendous" response to its latest car, Mercedes-Benz India Managing Director and Chief Executive Officer Eberhard Kern said.

Within the first 16 days of the January launch, 125 units of the S-Class were booked.

"In fact, the first car was rolled out from the Chakan plant today," Kern told a select group of reporters in Pune last evening.

The company is sourcing the cockpit, axles, engine parts, body paints and body parts, and the transmission for the S-500 locally.

Asked about the rationale for advancing the local assembly, Kern said, "No other car stands for the Mercedes brand promise more than the S-Class and we are delighted to manufacture the new S-Class at Chakan. This is also due to robust demand for the S-Class, which has bookings till June."

"This also reiterates our commitment to bring world-class manufacturing facilities into this strategic market, which is one of our top 10 markets globally, and to support our growth in the luxury automotive business," he said.

He also announced an up to Rs 21 lakh price cut for the top-end S-500 at Rs 1.36 crore (ex-showroom Mumbai) from Rs 1.57 crore for the imported model, following local assembly and local sourcing and the resultant customs duty gains. 

Asked why the entire duty benefit was not being passed on to buyers, Kern said the locally assembled model will be a five-seater, while the imported model was a four-seater.

Kern said the capacity at the Chakan facility will be doubled to 20,000 units per annum by the end of the month. The company has spent Rs 250 crore for this second phase of expansion, taking its overall investment in the facility to Rs 850 crore since it began local assembly in 2009.

Currently, the Chakan facility rolls out the S-Class, its bread and butter E-Class, the C-Class, the GL-Class and the M-Class. It imports completely built units of the hatchback SUV A-Class, the luxury tourer B-Class, the CLS-Class, SLK-Class, and AMG, among others.

Piyush Arora, vice-president, technical plant management, told PTI the company employs 450 people at the Chakan plant.

Kern, who took over as India head in December 2012, said the company will go for aggressive localisation of more models. He didn't elaborate.

He also said SUVs, led by A-Class hatchbacks, now constitute 20 per cent of its sales. Mercedes last year sold 9,003 units, up 32 per cent from 2012, making it the best show by the company in the country so far.

Kern answered in the affirmative when asked whether he is confident of maintaining the sales momentum this year, but did not mention a number. The German car major will be completing 20 years in the country in 2014.

"We have had an excellent start this year. I am confident of bettering last year's numbers this year," Kern said.

Asked when the company is likely to report a profit from its domestic operations, he said it is already a profitable business.