Mercedes looks at sub-Rs 20 lakh model

German auto major Mercedes Benz said on Thursday it will look at introducing models, including the A-Class, priced below Rs 20 lakh (Rs 2 million) in its bid to regain number one spot in the Indian luxury car market.

The company, which will complete launching of products aimed to drive volumes in India by 2015-16, expects 40 per cent of its entire product range to be priced below Rs 25 lakh (Rs 2.5 million) in the next 5- 10 years.

It is investing Rs 250 crore (Rs 2.5 billion) on new product line up till 2014.

"Yes, we are thinking in this direction," Mercedes-Benz India managing director and CEO Peter Honegg told reporters in New Delhi when asked if the company would introduce a model below Rs 20 lakh category to gain volume.

"I will not eliminate the case that we will have a car below Rs 20 lakh," he added.

He said the upcoming model A-Class in next year could be priced in this range.

The company will also introduce a sports utility vehicle based on the A-Class platform.

Asked if Mercedes-Benz will source smaller engines from French car giant Renault, with which the German firm's parent Daimler has a global association, for the Indian market, Honegg said the company may consider it in future although no decision has been taken yet.

Talking about its product plan, he said: "In the next 5-10 years, 40 per cent of our new models will be below priced Rs 25 lakh (Rs 2.5 million) . . . The premium segment, which is in the range of Rs 20 lakh to Rs 30 lakh (Rs 3 million), is witnessing good growth in India, while the luxury segment above that is flat."

Mercedes-Benz India had lost its leadership position to compatriot BMW in 2009. This year, it is likely to slip to the third position, giving way to Audi India, which is expecting to sell over 8,000

units.

Honegg said the company will close the year by selling almost the same number of cars sold in last year.

In 2011, Mercedes-Benz's sales increased by 27.69 per cent to 7,430 units from 5,819 units in 2010.

"Globally our target is regain the number one position by 2020.

"In India, we will be fighting for number game much ahead of it.

"By 2015-16, we will have the entire range of products from premium to luxury in India and that is when we will look at competition again," Honegg said.

He said the company's present aim is to remain profitable in times of severe pressure from adverse currency fluctuations that has forced the firm to hike the prices twice by a total of 4-5 per cent in 2012.

To gain volume and remain cost competitive, Mercedes-Benz will assemble all its future volume-driven models in India.

"Initially, we may sell some cars as imported models, but after a certain period, all models, which are volume drivers, will be assembled here.

Even the B-Class, which has recently been launched, will be assembled," Honegg said.

The company is also investing Rs 250 crore (Rs 2.5 billion) on new product line up till 2014.

"We have a robust product line up over the next few years. We will be investing Rs 250 crore (Rs 2.5 billion) at our Chakan plant near Pune for development and launching of new products till 2014," Honegg said.

The plant has a capacity to produce 10,000 cars every year on two shifts basis and the company has the capability to increase it to one lakh units in the next 10 years, he added.

The company on Thursday introduced sport editions of its C and E Class premium sedans.

While the new edition of the C-Class is priced at Rs 29.9 lakh (Rs 2.99 million), that of the E-Class is offered at Rs 39.9 lakh or Rs 3.9 million (ex-showroom, Delhi).