Falling Indian rupee may force price hike: Mercedes Benz

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Mercedes Benz India plans to invest Rs 250 crore to expand the existing manufacturing facility. (Reuters) Mercedes Benz India plans to invest Rs 250 crore to expand the existing manufacturing facility. (Reuters)
SummaryMercedes Benz India plans to invest Rs 250 crore to expand the existing manufacturing facility.

Sliding rupee against world currencies may force luxury car maker Mercedes Benz to go for price hike in future, a top official of the German auto maker said today.

Eberhard H Kern, Managing Director and CEO, Mercedes Benz India, also said the company plans to invest Rs 250 crore to expand the existing manufacturing facility.

The domestic currency has fallen by over 10 per cent in the last one month to trade at all-time low level of 60 against dollar. Today the rupee was quoted at 60.40 against

the dollar.

"We look at this development a bit worried. The rupee lost around 10 per cent since last month against euro and dollar. For the time being we are safe. We follow long-term hedging strategy. But if the rupee stays on this weak level, we have to look at our pricing," Kern told reporters on the sidelines of the launch of the new E-Class in Hyderabad.

Mercedes Benz sells different models of cars and SUVs with the price starting from Rs 21 lakh in India.

"If you import your kits or parts or cars in euro or dollar and sell in rupee, there comes pressure on pricing. Hedging does not last forever," he added.

Replying to a query he said the car maker would pump in an additional Rs 250 crore into the existing manufacturing facility at Chakan in Pune to increase the capacity from 10,000 units a year to 20,000 units," he said.

"We are investing an additional Rs 250 crore into our production facility to double the capacity by next year. Today we have a capacity 10,000 units a year, and from next year the available capacity will be 20,000 units," Kern said adding that the additional capacity creation is for the future requirement.

Mercedes Benz so far has invested Rs 600 crore in Indian operations.

Refusing to put a number, Kern said the company sold 7,138 units last year in India and is aiming a double-digit growth in the current fiscal.

While being critical about the high interest rates, he said, "though it is hurting the overall auto industry, Mercedes Benz belongs to different class and will not have any

impact."

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