Mercedes to invest Rs400 crore to augment assembly line capacity

German auto giant Mercedes Benz plans to invest around Rs400 crore in India to augment assembly line capacity by three-four times, pushing up its investment beyond Rs1,000-crore.

Mercedes Benz India managing director & CEO Peter Honegg has already taken up the matter with the board in Stuttgart for the additional investment.

With its existing CKD operations to swell by at least six products existing CKD operations - ML and GL from its existing portfolio and new introductions B, A, CLA and GLA - Mercedes would need to push assembly capacity from 10,000 units per annum to 25,000-30,000 per annum by 2014-15. This would call for additional investment of over Rs350 crore.

Currently, Mercedes assembles C, E and S class vehicles in India. Unveiling the B Class sports tourer at the Buddh International Circuit, in Greater Noida, near Delhi, Honegg said the vehicle, along with three others from Mercedes 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) would be produced in CKD format 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 at an investment of Rs180-200 crore. 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, the automaker's capacity would stand at 90,000 units per annum. The B Class is the first in a series of vehicles that Mercedes Benz had lined up to complete its portfolio and take on competitors BMW and Audi. The company has been losing marketshare rapidly, allowing first BMW and then Audi to overtake it.