Trying to hitch a ride on the Indian auto gravy train, luxury car maker Mercedes-Benz is developing a premium small car specially for the Indian market.
The car is being developed with help from Merc’s research and development centre in Bangalore at an investment of around Rs 6,000 crore, a senior company official told FE .
The development of the premium small car is over and above Merc’s plans to introduce its A and B-class cars — small category cars that it sells globally — into the country.
"In the long term, we can develop our own car for India. The days of having global models are changing and original equipment manufacturers (OEMs) are looking at market-specific models. We feel there would be a need for an India-specific car by us in the future," said Uwe Jarosch, chief financial officer and member of the board of management, Mercedes-Benz India.
"If we are investing 1 billion euro on the development of the car, then we definitely need huge volumes to justify that," he added.
With the Indian car market on steroids — 13,69,174 cars were sold in April-December 2010, 30% more than the previous year — global car-makers such as Hyundai, Honda, Volkswagen and Skoda have already launched premium small cars in the past three to four years.
BMW had also expressed its interest to launch its Mini, a premium small car, in India. While these cars cost between Rs 5 and Rs 8 lakh, Merc’s car is expected to be priced higher. The India-specific premium small car is expected to be based on the next-generation Mercedes Frontwheel Architecture (MFA) platform.
The MFA can have a wide range of wheelbases and configurations on it, and is capable of supporting a fuel-cell power train and other green technologies. Merc will begin discussions with Indian vendors soon regarding developing the car, the official added.
"Every OEM today wants to expand its portfolio to meet the requirements of various segments of the market," said Abdul Majeed, auto practice leader at PwC, adding, "other than Mercedes-Benz, we would also see other luxury car makers make similar moves in the premium small car segment."
Currently, there are 600 people working at Merc’s R&D centre in Bangalore and the company plans to double the number by next year. The R&D centre supports Mercedes-Benz headquarters in Germany and is on par with its other R&D centres in the world (it works partly on new platforms already).
Meanwhile, Mercedes-Benz said it will start semi-knocked down (SKD) assembly of M-class and GL by end of this year. In the recent future, the company will be launching the new May Bach next week and new generation C-Class by April this year.
It is also mulling a small engine on E-Class and C-Class models. Moreover, the company is also setting up brand centres in major metros, including New Delhi, Bangalore, Chennai and Mumbai.