With the trade war at its peak and as President of United States of America Donald Trump tries to suppress the Chinese domination in the manufacturing sector, India is now being looked upon as the new manufacturing base by many automakers. In line with this, a report from Automotive News Europe suggests that German luxury carmaker, Mercedes-Benz USA will import its best-selling GLC SUV from the company's plant located in Chakan, Pune. Mercedes-Benz in India has an assembly unit in Chakan near Pune, which has been in operation since 2009 and makes many popular cars and SUVs for the Indian market.
Mercedes-Benz India will join Ford Motor India who already makes and exports the EcoSport Compact SUV from its Chennai plant for the American market. Ford Motor India's exports have been increasing constantly and the company was the top car exporter from India during the period April 2017 - March 2018 by exporting 181,148 units from India. The company began to export the Ford EcoSport SUV to the US in January 2018.
Even the American carmaker, General Motors, which withdrew its sales from the Indian domestic market last year has converted its Talegoaon plant in Maharashtra as an export hub and has been exporting cars to popular global market including Mexico. However, there is no indication that it will make cars for the American market from India.
Donald Trump's strong stance on China over trade and import tariffs has made way for Made-in-India cars getting more exposure in many new global markets including America and Mexico. Most of the global carmakers including the likes of Renault-Nissan, Ford India, Mercedes-Benz India, BMW India has enough capacity at its plant in India to make additional cars for the other countries and the manufacturing capacities can be expanded as and when the demand arises.
Mercedes-Benz USA spokesman Rob Moran confirmed that Made-in-India Mercedes-Benz GLC SUV will land in the U.S shore as early as next month (October). Rob further said that Mercedes-Benz uses its forces and global presence in four continents and this includes the plant in Pune. The National Highway Traffic Safety Administration (NHTSA) has been informed by Mercedes about its import plants.
Mahindra also exports kits of its Roxor off-roader from India but has an assembly plant in Detroit under Mahindra Automotive North America that assembles the Roxor vehicle.
Why Mercedes-Benz GLC?
Mercedes-Benz Cars and SUVs are manufactured at over 30 locations globally and have flexible assembly lines to cater to vehicles in higher demand. Mercedes-Benz India in a statement said, "flexibility of the network enables vehicles to be built according to market demand and production volumes to be shifted between plants on four continents."
The lead plant for Mercedes-Benz GLC SUV is the company's Bremen plant in its home country Germany along with its plant in China, Finland and India. The Bremen plant in Germany is the lead manufacturing unit for the C-Class and GLC SUV. This also means that currently, Mercedes-Benz does not make GLC SUV in the United States and the rising demand in the US market sees other plants exporting the SUV. The statement further says that Mercedes-Benz uses a contract manufacturer to satisfy a temporarily high demand for specific models, in this case, the GLC.
The company confirmed Mercedes-Benz India plant in Pune supplies small quantities of GLC to the US, this serves as a backup solution in case of high demands. The Pune plant has an annual capacity to make 20,000 units and current nine vehicles are being assembled on the flexible production line for the Indian market. The demand for the GLC SUV globally is at its peak, the company has already sold over 2.20 lakh SUVs this year across the world.
Many experts do believe that India is in the spotlight right now and has a bigger role to play. If carmakers can establish a proper supply chain system in place and meet North American and European quality standards then India will indeed become one of the top export hubs in the world.
However, in the current scenario, India is only seen as an alternative way to ensure the work and the sales of a particular model is not stopped. Importing cars and SUVs from India to the U.S is largely an experiment and not a trend believes many analysts tracking vehicle exports from India. Many carmakers in India have unutilized capacities at its plant and with the world opening up to the idea of importing cars from India, this can change the equations for many companies. Strong domination by a single brand in the domestic market has seen top global carmakers finding it difficult to support auto plants with just domestic sales.
For Mercedes-Benz exporting a few thousands of GLCs will only mean higher profits for the company. Mercedes-Benz India is the number one luxury car maker in India and its Pune plant is fully equipped to meet the rising demand for GLC SUV in the American market. However, Mercedes-Benz India has not officially confirmed its exports to the American market.
The trade war has seen automakers going through a rough patch, Trump administration has threated a 25% tax on cars that come into the U.S market from Europe. China-U.S tensions are also all-time high ever since Donald Trump took over the oval office. Going forward, only Tariffs will determine sourcing of auto components by carmakers and India has the right ecosystem in place to be the global hub of automobile manufacturing.