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The global alliance between Mercedes-Benz and Renault-Nissan that began in April 2010 may soon find ground in India. This will come into play as the German carmaker considers the ‘Smart' brand and a bouquet of compact cars for the local market.
A feasibility study for the Smart ‘Fortwo' and an upcoming model, ‘Forfour', has already been done in India, though a launch is likely only by 2014, sources said.
Many senior officials from Mercedes told Business Line that the Franco-Japanese carmaker's Rs 4,500-crore worth investments on car and engine manufacturing at Chennai, next to parent Daimler's own truck facility, is likely to be utilised. Common parts sourcing and engine development will help in a lower cost structure, leading to competitive pricing.
Common platform
“India is one of the countries, where there is a very logical strategy to be made. We see more need to localise in your market. In the foreseeable future, we will come to that part of the world and discuss the possibility of introducing Smart,” a senior official said.
He added, “With Renault we are looking for a common platform approach and we would need lower displacement engines. We thought this might be an opportunity to drive through economies of scale with two partners.”
Lifestyle cars
Though small in size, Smart cars will not be positioned as an entry-level vehicle in terms of cost – the pricing is likely in the Rs 10-15 lakh range. Instead, it will be a “lifestyle city mobile aimed at relatively affluent customers”.
Full Manufacturing
“Last year we sold 10,000 (Smart) models in China. And there are a lot of parallels between India. Even if we don't do 1,000 a month, but may be 300 a month - it is something that we are looking at,” said the official.
By this year-end, Mercedes will launch its first compact model in India – the B-Class hatch – followed by the smaller A-Class by early-2013.
“In terms of sheer volumes, we see growth potential in our compact cars. We will definitely also look at other car lines - there will be a surprise. We have invested in a paint shop and are studying the possibility of full manufacturing in India, maybe an engine, axle plant …everything,” Mr Matthias Luhrs, Chairman of the India Board and Vice-President for Global Sales, said.
He added, “We will go to the Board in the next couple of months with the investment plans we will need for further capacity in India.”
New production lines are planned to locally assemble these and also its SUV range, apart from the C, E and S-Class sedans it does already. With an aim to more than double sales to 15,000 units over the next two year, the annual capacity has already been extended to 20,000 units with a second shift.
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