Mercedes Benz India bets on AMG 43 models to start local assembly of performance sub-brand

The German luxury carmaker recently introduced the power-packed AMG avatar of its popular executive saloon - the E-Class. The new AMG E 63S is the most powerful E-Class ever, boasting a 4.0-litre bi-turbo V8 petrol motor, which produces a staggering 612hp of power, capable of propelling the four-door luxury sedan from 0 to 100kph in just 3.5 seconds. The car comes with a starting price of Rs 1.5 crore, ex-showroom India.

While the company doesn't target significant volumes with the pricey model, its AMG portfolio, comprising 12 performance-oriented versions of its regular cars, acts to strengthen its brand image and produces a halo effect around the glorious Mercedes-Benz name.

Speaking to Autocar Professional on the sidelines of the launch, Roland Folger, managing director, Mercedes-Benz India, shed light on the company's future strategy to grow the performance segment with the tamer AMG 43 cars in its portfolio and also possibly localise the models, which today come only through the CBU route and command a hefty import duty. 

What is your AMG strategy how does the market for performance cars look like this year?

Our AMG portfolio is not a big contributor to our overall sales. AMG cars contribute less than 10 percent of our sales. We have the umbrella brand of Mercedes-Benz, and in order to give our customers more choice on the exclusivity side, we have two sub-brands - Maybach and AMG on the ultra-luxury and sportier sides respectively. It seems to work really well for us. If we see the average age of a Mercedes customer in India, we have been able to bring that down from 43 years some six years ago to 37 years now, which is one of the youngest in the world. For AMG however, it is even lower at 30 years. The good thing for us is that this is also the customer space where we have the largest population of people, and these people normally tend to stay with a particular brand if their experience is nice. So, brand loyalty is a big thing and there is certainly a chance that a customer continues to remain an AMG loyalist for the next thirty years. 

But isn’t it the case that exclusive brands usually offer better margins and are therefore good contributors to profit sheets?

Of course, otherwise, it would not be worth it. But, unfortunately, from a cost perspective, we need to bring in parts and also train people for working on cars which are sold in such miniscule numbers. So, from an efficiency perspective, there are lots of questions in this regard. But, what helps us really is that the AMG brand makes the whole Mercedes-Benz brand more attractive. Now, one cannot put dollar value behind it and moreover, the halo effect also positively helps the overall brand sentiment. But, it seems to work. It does wonders for our marketing teams and just the sheer excitement that people have for these vehicles is tremendous. We might never sell the AMG E63 S in more than double digits anyway, but, the kind of attention it grabs and the emotion it creates is phenomenal. 

 The newly launched Mercedes-Benz AMG E63 S

An analogy to this would be just why do people go to see the Formula 1. It’s the noise, it’s the smoke, it’s the smell, which is also why Formula E doesn't work so well. People are conditioned in a certain way to those things and that makes it highly emotional and therefore also attractive. While from a profitability perspective, naturally, we do make good margins on these vehicles, but, that's just now why we sell them. It would rather be easier financially to do without.

Does the E-Class remain your highest grossing model?

Yes, it does. And while the AMG version of the E-Class will give a further boost to the car from an image perspective, launching the new E-Class only as a long wheelbase variant was a gamble in a strategic sense, but, has paid off really well. People now know what they get and customers have been loving it. The car looks a little bit traditional and carries status exactly well. So, it's a nice and well-proportioned car, offering superb space on the inside, with the only customer complaint now being that of not having all the features as that of the S-Class.

Any likelihood of doing any kind of AMG assembly in India?

It's a number game. We need to have a certain minimum amount of vehicles to be able to do that. Yes, we are dreaming about it as well as it will open a new set of customers and clientele. So, we are having some hopes with the introduction of the new 43-series of cars in the AMG line-up, which is basically a full AMG capable of doing everything that a 63-series car can do, but, combined with a smaller engine because one doesn't need all that power and the acceleration in the Indian scenario. 

 The newly launched Mercedes-Benz AMG E63 S

It helps to bring down the price significantly and therefore make that range even more attractive. The 43 range allows us to give more access to the market which is sport-oriented enough to be wanting to spend some significant additional money, but, at the same time do not want to waste on something that one could never experience on the roads in the first place. So, if that segment continues to grow in the future just like it is at the moment, there might be a potential to introduce locally assembled AMGs three to four years down the line.

What would be the ballpark number to start local assembly?

Anything above 500 units gets us interested. It has to be noted that certain investments have to only be volume-driven. The investments for localisation start getting interesting at 500 units and we keep telling the government that if there has to be investments from our end, we need to be assured of volumes. While today we have nine vehicles being produced locally, we can include three to four more. 

The AMG 43 models available in India

Also read: 

Mercedes-Benz India launches hot AMG E63 S at Rs 1.5 crore