Mercedes Benz India has entered the entry-level luxury car segment with the likes of the A-Class and B-Class hatchbacks. Going forward, the CLA sedan and GLA crossover will also be launched in India. By the end of 2015, Mercedes Benz India will have no less than 4 cars in the entry-level luxury segment, all of them anticipated to be priced well below the 30 lakh rupee mark.
Meanwhile, rivals like Audi and BMW have their own offerings being readied up for the Indian car market. While BMW will drive in the 1-Series hatchback in the second half of this year, plans are afoot at Audi India for the launch of the MQB platform based A3 sedan. Although a first mover in the entry level luxury car space, Mercedes Benz will have to contend with plenty of competition in the coming months.
With BMW India positive about CKD assembly of the 1-Series hatchback, the pressure seems to be already on Mercedes Benz. This, as both the A-Class and B-Class models are imported into India through the completely built unit (CBU) route, a mode of import that results in the cars being slapped with hefty import duties, the likes of which are steadily inching higher with each passing year.
Although Mercedes Benz did announce the CKD assembly of the A-Class and B-Class from 2013, these plans (According to TheEconomicTimes) have been pushed to 2014. Currently, the car maker has doubled CKD assembly operations at Pune, with an investment of about 850 Crore rupees. This increase in CKD assembly capacity is expected to accommodate the entry level luxury car range based on Mercedes Benz's MFA platform.
Notably, at the launch of the B-Class hatchback in India last year, Mercedes Benz stated that it has factored in CKD assembly plans while pricing the car in the country. It also added that the prices would not change (be lowered) even after CKD assembly commences. While this information is specific to the B-Class, it remains to be seen whether such a strategy is applicable to the A-Class as well.
If Mercedes Benz India has already factored in CKD assembly plans while pricing both the A and B-Class models, expect no change in the current prices of these cars. If it hasn't factored CKD assembly (on the A-Class at least), prices could drop, making the car more attractive to prospective buyers.
Given the fact that Force Motors assembles the 2.2 Liter turbo diesel engine found on the base variants of the A-Class and B-Class models, CKD assembly has the potential to deliver valuable cost savings to Mercedes Benz. Presently, Mercedes Benz assembles four car ranges in India, the E-Class, the C-Class, the S-Class and the ML-Class. In the coming months, CKD assembly of the GL-Class SUV will be kick started at the car maker's Chakan factory, off Pune.
The MFA (modular front wheel architecture) platform refers to predominantly front wheel driven Mercedes Benz cars that promise affordable luxury. However, the platform is flexible enough to allow all wheel drive (AWD) models. In fact, the AMG spec MFA based cars come with AWD as standard. The MFA range of cars, comprising of models such as the A-Class, B-Class, CLA sedan and GLA crossover, are aimed at younger car buyers, many of them seeking to buy into the three pointed star brand for the first time.
These buyers are eventually expected to be loyal Mercedes Benz customers in the future, upgrading to the more expensive cars in the German car maker's range. A similar strategy is being followed by other Teuton luxury car brands such as Audi and BMW. Other luxury brands such as Jaguar, Land Rover and Porsche are also touted to the join the entry-level luxury car brigade in the coming years.