Too fast, too furious: Will Merc's India plan pay off?

Well-heeled automotive thrill-seekers have a new raison de célébrer. In early November, German automobile giant Mercedes-Benz launched the new GLC 43 model, and this isn’t just another racy crossover for the subcontinent. It is the first in the line of Merc’s premier AMG performance cars, which are now being assembled at Chakan, Pune. Mercedes has also slashed its price by 25%, for what would normally cost in the neighbourhood of ₹1 crore.

AMG—which refers to Merc’s performance division for cars—features engines that are powerful and tuned for sporty handling. They come both in series and the AMG line. The series cars are in various engine specifications starting from the 35 series, 43 series, 53 series, and going up to the more powerful 63 series, and the GT series. The AMG line adds styling elements to non-AMG regular models. The 35 and the 43 series of engines are the starting range of the AMG portfolio.

Gautam Singhania, chairman and MD of Raymond and an automotive aficionado, feels the move by Mercedes to assemble AMGs in India reflects the changing needs of the Indian consumer. “The move by the German manufacturer to assemble such cars reflects a growing confidence in the appetite for sports and performance vehicles in this market,” he says.

Of course, it also makes good business sense for the German automaker.

Dinesh Thakkar, founder and managing director of stock brokerage firm Angel Broking and a sports car collector who owns two AMGs, says that “with the local assembly, the cars become more affordable and would be great starting options for younger buyers and millennials”. Thakkar adds that the AMG cars are all about power, and, although, Mercedes will locally assemble cars with the V6 engine, and not the V8, these are still fast cars, and will be exciting to drive.

With regard to the AMG assembly in India, Martin Schwenk, managing director and CEO of Mercedes-Benz India, points out that although the company currently sells 10 different AMG models, import duty still remains an issue. “High import duty remains a barrier to the AMG brand, especially for the top-of-the-range products like the 63 and GT series,” he says.

Last year, its market share for performance cars, which includes peers such as Porsche, Audi S, and BMW’s M Performance line-up, was greater than 50%, making it the front runner in the category. “There ought to be at least 1,000 AMG customers in the country,” says Piyush Arora, executive director of operations for Mercedes-Benz India, adding that plans for an official club may be in the pipeline.

Strategically, what does it mean for the German player who dominates the luxury car segment? “It is a really big deal for us, both from the customer and the manufacturer’s point of view. We have been importing AMGs from Affalterbach for the last decade, but this is the first time we have one made in India,” Schwenk says. “The localisation makes our AMG ambitions in India even more pronounced.”