Mercedes-Benz has recently disclosed plans to double its installed capacity at its Pune factory, aiming to produce an impressive 40,000 cars annually. This move comes as part of the German automotive company’s initiative to secure its lead in the country, focusing on launching new models and expanding its footprint across the Indian luxury car segment.
Established in 1994 in Pune, India, Mercedes-Benz India Pvt Ltd was founded to become one of the fastest green-field operation ever created. Presently, they hold one of the top-ranking positions among Mercedes-Benz’s global Completely Knocked Down (CKD) plants. Their vision revolves around the delivery of world-class automobile solutions infused with intelligent technology, embodying the philosophy of offering nothing but ‘The Best or Nothing.’
Currently in the early stages of development, this expansion aims to increase the annual installed capacity at the Pune factory, situated just outside Pune, from the existing 20,000 units. This step by Mercedes-Benz marks the first major plan by one of the leading luxury carmaker to broaden its base and investments in India, seizing the opportunity presented by the escalating demand for high-end vehicles chasing the wide automotive market.
Santosh Iyer, Managing Director & CEO of Mercedes-Benz in India, has revealed to that the company has initiated the process of “identifying and evaluating” future expansion requirements, acknowledging the need for growth as sales steadily approach peak capacity. “While we are fully focused on 2024 right now, we will need to expand if the existing growth rates continue,” he stated.
The company recently announced the sale of 17,408 units in 2023, reflecting a 10% growth compared to the 15,822 units sold in the previous year.
As Mercedes-Benz celebrate three decades in India, its confidence in the luxury market remains unaffected, especially with the sector achieving record highs of approximately 47,000 units in the last year, displaying no signs of weakening. The automaker plans to introduce more than a dozen new cars in 2024, including three electric vehicles, signaling its dedication to staying at the front of innovation. The company is set to invest over Rs 200 crore in manufacturing operations, new product startups, and digitization.
The Pune factory, occupying a 100-acre plot, is set to be the critical point of any potential expansion. “We will see how this year goes and only then take a call on doubling capacity,” Mr Iyer said, stressing the cautious approach towards aligning capacity expansion with market requirements.
According to Mr Iyer, the Indian luxury car market displays sustained demand, highlighted by the increase in the average selling price of Mercedes-Benz vehicles, soaring from Rs 57 lakh in 2018 to Rs 88 lakh last year. He said that this growth in pricing reflects genuine luxury consumption rather than motivated buying, indicating the brand’s stronghold at the top of the luxury market.
