Mercedes-Benz India turns 20

As Mercedes-Benz India Ltd (MBIL) completes 20 years in India, it can look back at a chequered innings it has had in this country.

India is one of the German carmaker’s strategic markets today and one of its models – the A-class – is the most affordable luxury cars available. Mercedes says it is on track to even exceed 9,000 units in this calendar year. This would be a milestone of sorts given that just over a couple of year ago, the company had lost its top slot.

However, it was a different scenario going back earlier to the initial years of MBIL in India. The country was just a few years into its liberalisation, luxury cars were imported, foreign exchange was scarce and there were quantitative restrictions on imports. It could also be said that India was not really on the radar for the German company as Europe was pretty much the focus, and the Asian story, certainly India’s, was just beginning.

The Mercedes brand made its debut in India via a 51:49 JV between Daimler AG with Tata Motors (then Telco) and among the first cars to be made here was the E-class petrol manual. In those years, the luxury car numbers sold annually were between 200 to 300 sold, a far cry from today.

But change was in the air. Tata Motors embarked on its Indica venture in 1998 and needed cash to fund it. So they were not really interested in their equity in the JV which by 2001 was about 14 percent. In those days Merc and Tata executives would debate whether the 10,000 mark could ever be crossed in India.

In April 2001, Jurgen Ziegler, MD and CEO, MBIL, said in a press release:  “The FM’s announcement to bring down the customs tariff at Asian level of 20 percent and the introduction of uniform VAT at 16 percent within three years is an extremely encouraging sign.” Ziegler added that the company had agreed to take over the remaining 14 percent and become a fully-owned subsidiary of Daimler. In the early years, the E-class rolled in followed by the S-Class and C-class and for all practical purposes, and the company’s plans were centered around these models.

In the early 2000s, Daimler AG bought stakes in Mitsubishi and Hyundai and at one point there was a plan to bring out an ‘Asia’ car that would be the equivalent of the Smart car. And one of the markets would have been India. However, that plan did not take off.

Way back then, it would not have been conceivable way that the country would have a wide range of luxury cars and SUVs as it has today from the likes of Mercs to Audis and Range Rovers.

Major changes in the luxury car segment began in around 2006-07 when Mercedes’ German rivals – BMW and Audi – made their moves in the India. The shift to Asia had begun for the world’s auto giants and the luxury carmakers were part of that. After that, India’s luxury car market was destined never be the same again. Both Merc rivals grabbed market share from the lead player with aggressive strategies to woo younger, wealthier buyers with cars that were perceived to be more modern and ‘with it’ than Mercedes. Mercedes which, despite its first-mover advantage, was perhaps rather complacent.

Then in 2009, Mercedes built its own factory at Chakan, near Pune. A year later it ceded the top slot in sales to BMW. In a year or so, aggressive moves by Audi as well relegated Mercedes further down in the pecking order for luxury cars. With increased competition, Mercedes had to gear up for tough market conditions.

In the last two years, Mercedes has gone all out to woo buyers and re-gain its market share. If it designated 2013 as the Year of Offensive bringing in models such as the A- and B-class compact cars, the GL-class and E-class; 2014 is the Year of Excellence. The German luxury marquee has made several moves in various directions. Apart from eight launches so far, the last for this year is the new C-class on November 25.

AMG THRUST
After bringing in the first AMG model in 2009, MBIL has strengthened its offerings bringing in four offerings including the GL 63 AMG, ML 63 AMG, CLA 45 AMG and GLA 45 AMG in the current year. It also inaugurated its largest service centre at T&T Motors in Delhi. Earlier in January 2014, it launched its flagship new S-class and six months later, announced local body manufacturing for the S-class 350 CDI.

After its most advanced CKD operations at Chakan, for Daimler globally, MBIL also rolled out the first ‘made-in-India’ M-class followed by the ‘made–in-India’ GL-class, the only country outside of the US to do so.

In 2012, the company kicked off its state-of-the-art paint shop that uses eco-friendly water-based paint procedures. On other fronts, the company also opened its AMG Academy at the Buddh International Circuit that conducts several sessions for enthusiasts keen to learn how to drive an AMG Mercedes.

On the retail front, Mercedes claims it has one of the biggest dealer network in the segment. In 2014, it has added 11 outlets with some new locations being Bhubaneswar, Raipur, Bhopal and Mohali.

For luxury car manufacturers, operating in India can be especially challenging given the country’s policy regime. In 2012, the government imposed a 75 import duty on CBUs and raised it to 100 percent in 2013. Luxury carmakers were up in arms on this given that this made put a spoke in their plans to bring in more models.

The year 2014 promises to be a milestone year for Mercedes after 2010, the first year in which it crossed the 5,000-mark in sales. So far, it has sold 4,717 units in January-June, the latest figures available. With 17 offerings in India, the company has come a long way from the time way back in 1998 when the first of the locally-made cars, an E220 petrol manual cost about Rs 21 lakh.

KEY MERCEDES-BENZ INDIA MILESTONES
- The tryst of Mercedes-Benz in India dates back to the beginning of the last century when only the Maharajas had the luxury of owning the three-pointed star.

- Later in the 1950s, the three-pointed star became more visible with its collaboration with Tata Motors primarily in the commercial vehicle space.

- In 1994, Mercedes-Benz set up shop in India.

- Among the first cars to be made was the E-class in 1995, followed by the S-class in 2000 and the C-class in July 2001.

- The journey that began 20 years back with the rollout of the iconic W124 has seen many an  important milestone.

- Mercedes-Benz India rolled out its 10,000th car in April 2003.

- In 2009, it set up one of the most advanced CKD operations within the Daimler world, at Chakan. It is considered a benchmark production facility in Daimler’s CKD world and one of the fastest greenfield projects.

- The Pune production facility got a state-of-the-art paint shop using eco-friendly, water-based painting in 2012.

- In 2009, the AMG range of cars made its India debut.

- With more than 17 product offerings, an enviable production facility, a fascinating network expansion and unmatched service, Mercedes-Benz is geared up for an exciting growth phase.

- In 2013, Mercedes-Benz inaugurated the Year of the Offensive bringing in compact offerings such as the A-class and B-class. The company has over 3,000 compact cars on Indian roads till date.

- The Year of Excellence 2014 marked an important milestone — the 50,000th car rollout from the Chakan plant.