Mercedes Benz Yearns For India Inking FTAs With More Countries
Mercedes-Benz, the biggest luxury carmaker in India, is anxiously waiting for a moment when the government will be signing Free Trade Agreements (FTAs) with more counties. The company maintained that such a drastic move will not only ensure that the import duties on its select models will come down, but may also lead to a situation where it can export its models out of the country. Being the first luxury carmaker to set up its base here, it already has the widest array of locally assembled products like E, C, S, GLE, GLS, GLA, CLA, Maybach S 500 and GLC-Class models.
Roland Folger, MD, Mercedes Benz India told BW Businessworld, “I hope that the Indian government takes a little bit more serious (measure) to come up with Free Trade Agreements (FTAs). At the moment, they have a few (agreements) with only a few countries and amongst them are Thailand and other places (countries). Once we come with a much more conclusive agreement, then it becomes from a business case perspective interesting for us (to export from India). At the moment, the only thing that basically makes it interesting for us is that we have a shortage of vehicles. Instead of not selling it at all, it might also be interesting for us to serve into a country where from a purely financial perspective it would not make sense. That is purely opportunistic. But as a concept, we need to get much higher volumes in order to bring our costs down. The costs, including the taxation and logistics costs, are killing us on exports. This is because India is not to say an export market for (premium) vehicles. There is no established logistic chain such as to get vehicles to other countries.”
It is to be mentioned that the Indian arm of the Stuttgart-based firm, which has been operating in India since 1994, has already invested Rs 1,000 crore in multiple phases to establish and expand its manufacturing facility spread over 100 acres at Chakan, Maharashtra. Set up in 2009, this is among the fastest green-field operations ever to be created and is rated as one of the top-most completely knocked down (CKD) plants of Mercedes-Benz globally. Having an annual capacity of 20,000 units per annum, this plant has the highest installed production capacity by a luxury carmaker in India. Media reports have also suggested that the company will be pumping in Rs 2,000 crore to double its capacity and have a separate product line for exports.
When asked if Mercedes Benz India has any plans to make A-Class and B-Class in India, he maintained, “We always look into all of our lineups. Whenever we reach a certain significant amount consistently, then we usually start building them locally. A-and B-Class have not reached these volumes yet.”
When asked to comment on the government’s sudden U-Turn in EV roadmap, he maintained, “The government has not really backtracked on it because they have not really sent out a policy yet. They made a statement where they said yes we hope we can come to 100% by 2030. That was not a policy because a policy is something which takes more than that. The government is not going soft (on EVs). I think a lot of people have put words in the mouth of the government. There was a statement and it was not an indication of what the government would like to have. Once we started talking and openly discussed the implications with them of this, the government has said well maybe it will be a bit too harsh to go to full 100% by 2030 which doesn’t mean that the government is saying no to Electric vehicles. The same way we are not saying no to electric vehicles. We have a clear commitment that by 2025, we want to have 25% of our volumes (not only) worldwide but also India wide (full electric). We will be happy with that solution because that way we can move pollution out of the cities in someplace else. It is not the (only) solution necessarily but at least it is going to be less polluting in the cities.”
When asked if Mercedes Benz will bring hybrid models into India, he stated, “At the moment is looking at supporting electric vehicles predominantly. They have chosen for not to support hybrid vehicles. They don’t understand that plug-in hybrid can be a temporary solution to all other issues (such as curbing emissions) in the next 8-10 years. A plug-in hybrid with a 50KM range basically will enable you to drive emission free in a city. You can charge it at home and take it on the weekend for long distances. For me, it is the ‘best of both the world's approach’. We are talking to the government and hopefully, they will see the benefits of that. “
