Mercedes Looks to Ramp Up Parts Exports from India; Car Exports Still Under Review

Mercedes-Benz is strengthening its Indian supplier relationships to serve global operations, with Chairman Ola Källenius identifying component exports as an opportunity that can grow ahead of any larger finished-vehicle export programme.

The company is building technology and supply partnerships in India for markets beyond the country, Källenius said at a media roundtable in Pune.

“We can, if you will, export out of India on a component basis before you ask the question, on a full vehicle,” he said at a media roundtable.

“These tech partnerships and supply partnerships are going from strength to strength.”

He added that a larger manufacturing step would depend on domestic market growth and the emergence of the right product at the right price point.

“I think that is more a question of when as opposed to a question of if. We have not made such a decision at this point in time," he said. 

Källenius estimated India’s premium-luxury vehicle market at approximately 60,000 units within an overall market of around five million. Mercedes-Benz’s sales of around 20,000 vehicles gave it a substantial share, but he said the company saw considerable room to grow.

The first priority was to build on that domestic business. Based on India’s economic growth prospects, Mercedes-Benz expected to expand significantly over the next five to seven years.

Alongside that growth, Källenius wants to make greater use of India’s supplier base for the company’s international operations.

The country’s automotive supply industry was already strong and becoming more sophisticated, he said. Relationships with Indian suppliers could develop globally, much as Mercedes-Benz’s partnerships with suppliers from Europe, the US, Japan, Korea and China had done.

“They’re worldwide relationships. They’re not confined to one region.”

Asked whether free trade agreements could support vehicle exports, Källenius said reducing barriers improved the likelihood of cross-border business.

“If you have less friction, the likelihood of export transaction is higher,” he said.

He welcomed the India–EU free trade agreement as good news for both regions and for business, without announcing an export model, production commitment or volume target.

The sourcing plans form part of a broader effort to increase India’s contribution to Mercedes-Benz. Källenius said the company’s engineering operation would take on more responsibility alongside stronger supplier relationships and growth in domestic sales.

With its largest R&D centre outside Germany and more than three decades of local production experience, India already had the foundations for a wider role, he said. “We have all the ingredients.”

“So this is not a one dimensional play. You have to look at this. India in the Mercedes world is a 360-degree play.”