Mercedes-Benz India rides on Indian supplies to roar ahead of competition

The use of local content in the E-Class model of Mercedes-Benz India has reached 60 per cent as against the average 40 per cent localisation across its other models.

Increased localisation and attractive financing solutions have helped Mercedes-Benz beat its German counterpart Audi in terms of sales in the first quarter of 2015. Mercedes-Benz India registered a 40 per cent year-on-year growth in sales with 3,566 units in the first quarter of the current calendar year, compared with Audi's 3,181 units during the same period.

The company assembles more than 80 per cent of the cars it sells in India. It sold 11,213 units in the last financial year.

"We do the assembly of engines, axles, dashboards and gearboxes in India; we do the bodywork, welding and painting here," Eberhard Kern, Mercedes-Benz India's Managing Director and CEO, told Business Today on the sidelines of an event in Delhi on Wednesday.

"Most of the parts come from international hubs but some like wiring harnesses, liquids, etc are sourced from India. Our suppliers do not produce most of the parts in India because the volumes are low."

The company recently doubled the capacity of its Chakan, Pune plant to 20,000 units a year. The company has so far invested Rs 1,000 crore in the plant.

"This allows us to add even more products to local manufacturing," said Kern.

"Today, we produce five products: S-Class, C-Class, E-Class, M-Class and GL-Class. We have decided to add the CLA Class and one more in future."

When asked if the company has any plans for full-fledged manufacturing in India, Kern said the company would require to achieve 40,000-50,000 sales in one product to even think of manufacturing in India.

Kern said one of the pillars of the company's growth in India has been its financing solutions provided through in-house Daimler Financial Services (DFS) and other financial institutions. "Financing accounts for three-fourth of our sales. DFS finances one-fourth of the sales," said Kern.

Mercedes-Benz India has announced 15 launches in 2015. The first quarter has already seen five launches - new CLA Class, new B-Class, new C-Class diesel, CLS 250 CDI and E-Class Cabriolet.* It currently has presence in 38 cities and expects to reach 45 cities by the end of the year.

(*An earlier version of the story had incorrectly mentioned that Mercedes-Benz didn't launch any vehicle in the first quarter. It has now been corrected.)