Mercedes-Benz will spend around US$72m on its Indian plant to boost capacity 3-4 times.
This will push investment in plant and machinery at the Indian subsidiary beyond $178m, The Times of India reported.
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Mercedes Benz India managing director & CEO Peter Honegg has already cleared the spend with the board in Stuttgart.
The automaker will add at least six products to its existing CKD kit assembly operations – ML and GL and new B, A, CLA and GLA so it needs to boost capacity from 10,000 units a year to 25,000-30,000 by 2014-15..
At present, the company assembles C, E and S Class vehicles in India. Honegg said the newly launched B-class, along with three others on the front-wheel architecture platform – A Class (hatch) to be launched in 2013, CLA Class in 2013 (compact SUV) and GLA Class in 2014 (small sedan) – will be produced from CKD packs locally within a couple of years.
“We have just increased paint shop capacity at Pune plant from 10,000 units per annum to 20,000 units. With a little more investment and additional shifts, the capacity will go up to 30,000 and even 40,000 units per annum. Alongside, investment is required in creating new assembly lines,” Honegg said.
By 2020-21, Mercedes will increase its plant capacity to 90,000 units per annum.
“We are not in the numbers game now because the luxury market at 25,000 units isn’t big enough to fight for and our portfolio isn’t complete yet. We will take on the market in 2014-15 when our portfolio is complete and the luxury market size increases to 125,000 or more a year,” sales and marketing chief Debashis Mitra said.
By 2013, Mercedes expects the market to pick up from the flat growth the industry is experiencing at present. It is also hoping the rupee’s slide is arrested.
“The 20% devaluation of the rupee versus the euro is hurting our margins. If the slide continues, we will have no option but to revise the price of cars,” Mitra added.
