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Customer LoginsLuxury OEMs take local assembly route in India; Mercedes-Benz launches new GLC
Although Mercedes-Benz has been ahead of the curve so far by carrying out local assembly in India, luxury rivals BMW, Audi, and even Jaguar Land Rover are realising the importance of such a strategy and are increasing investment in this direction.
IHS Markit Perspective
- Significance: Delivering on its strategy of assembling high-volume models locally, Mercedes-Benz has launched its GLC sport utility vehicle (SUV) in India. The new locally assembled versions come with price reductions in the range of INR350,000-800,000 (USD5,253-12,005) compared with the outgoing variants.
- Implications: With competition among luxury OEMs growing, increasing local assembly is the next logical step for automakers in India.
- Outlook: Although Mercedes-Benz has been ahead of the curve so far, rivals BMW, Audi, and even Jaguar Land Rover are realising the importance of local assembly and are increasing investment in this direction.
Mercedes-Benz has launched its locally assembled GLC sport utility vehicle (SUV) in India. In a statement, the automaker says that the vehicle is offered with a choice of two engines: a 2.2-litre diesel engine or a 2.0-litre gasoline (petrol) powerplant. The diesel engine generates maximum power of 170 hp and maximum torque of 400 Nm, while the gasoline engine delivers maximum output of 245 hp and maximum torque of 370 Nm. Both engines are offered with a 9-speed automatic transmission. Introduced in three variants - GLC 220 d Style, GLC 220 d Sport, and GLC 300 Sport - the vehicle is priced in the range of INR4.79 million (USD71,760) to INR5.19 million in New Delhi. These prices reflect reductions in the range of INR350,000-800,000 compared with the outgoing versions, which were imported into India as completely built-up (CBU) units.
The vehicle is assembled at Mercedes' Chakan plant in Pune, Maharashtra, which also assembles eight other Mercedes nameplates. "With the localization and availability in petrol and diesel, we are confident that the GLC will become an attractive proposition for our discerning buyers with enhanced value propositions and increased availability," said Mercedes-Benz India managing director and CEO Roland Folger. The company claims that its production uses technologically advanced synchronised conveyor systems and latest-generation PLC control units for all equipment, which provide adaptability with different models on common production lines, thus increasing the flexibility of production.
Outlook and implications
Mercedes-Benz's move is the latest in a well-established trend among luxury OEMs to focus on local assembly as a measure to avoid India's high import tariffs. At the same time, local operations allow automakers greater flexibility in terms of output planning. Mercedes has been an early adopter in this regard and has been adding more models to its local assembly operations. Apart from the GLC, the automaker's output at the Indian plant includes the C-Class, E-Class, S-Class, and CLA sedans and the GL-Class, GLA, and GLE SUVs. IHS Automotive forecasts the GLC to sell nearly 520 units in India this year before doubling sales next year.
"We began local production of our cars in 1995 with the E-Class. From then on, it has been a wonderful journey for us and I can proudly say that our cars produced here give us immense satisfaction. Localisation has helped us in cutting costs and deliver on boosting local resources. We now have nine models which have been produced from our plant here in Pune," said Folger. Product localisation rates are now around 60-65% in most of the local top-selling models from the German luxury OEM.
Other automakers have also been following this trend. BMW, which now has nearly 50% local content in its vehicles sold in India, has used localisation to lower its cost structure and pass on the benefits to customers. Similarly, Volkswagen's Audi has been making inroads in the local market on the back of local assembly and increased product localisation. Jaguar Land Rover (JLR) - which has been somewhat behind the curve - has also identified this crucial strategy to make its local operations competitive. The Tata-owned luxury brand, which currently assembles six nameplates at Tata Motors' Pune plant, plans to add local assembly of the next-generation XF sedan.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.