Merc to turn India into R&D hub

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Jun 30 2010, 04:38am hrs
In a strong indication of the growing clout of emerging markets in the operations of major auto giants, luxury carmaker Mercedes-Benz is planning to step up sourcing of key components from India and make the country an important R&D hub in the next few years.

The company had identified India as a key market for its cars and was looking to make India a part of the Mercedes-Benz story worldwide, Wilfried Aulbur, managing director & CEO of Mercedes-Benz India, told FE.

This is part of our efforts to source from any place where there is good quality, best delivery capability and best price. We have identified India and China as the two countries which would be our focal points.

Aulbur said components sourced from India at present formed a very small part of Mercedes-Benz products globally. However, in the coming years, the share would go up gradually. As the Indian auto market grows, exports from the country would also go up. We have seen that with Korea and the same is going to happen here. But it would take some time and investment... That's why we want to put our resources here (in India), he added.

Apart from making India an important hub for its global portfolio, Aulbur said the company is also looking to set up its R&D centres in Bangalore and Pune to develop and engineer important motors for its cars. It (India) is the biggest R&D center outside Germany. So far, we are doing part development. The next step would be to do motor development and then move to variant development out of Bangalore. There is a clear plan in terms of value addition out of Bangalore that we see, he said. The total number of engineers in Bangalore and Pune stand at 550 at present, doubling from 2006 when the number was 200. We would look to recruit more engineers for India, he said.

Resting speculations of the company launching its small car A-class on Indian roads, Aulbur said India was ready for the car but refrained from giving any precise time frame. At sometime the Indian market would be ready..I can see that happening but we have not taken any decision on that so far, he said. The A-class would be positioned as an entry-level car in the country.

On Monday, Mercedes-Benz India entered into the used car segment under its Proven Exclusivity programme. The company has identified six dealerships across New Delhi-NCR, Ahmedabad, Chennai and Mumbai to offer customers a range of Mercedes-Benz products at reasonable rates. The company expects close to 15% sales from this segment. In mature markets like Europe, the used car segment accounts for over 30% of the company's sales. We are looking to offer an attractive package to our customers and open up our brand to a new customer base. This forms a part of the global used car programme that we had launched in 2009 and is currently operating in 35 countries, Aulbur said.