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Mercedes Takes A New Turn

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Like moths to the flame, India is drawing auto companies to its shores. You have Audi, BMW, Mercedes-Benz, Bentley and Rolls Royce that cater to the very well-heeled; Hyundai, Suzuki, Honda and Toyota for the masses with a range of hatchbacks and entry-level sedans. Now, this segmentation is in for change.

German auto-maker Daimler, one of the early entrants with its Mercedes-Benz brand, plans to bring its compact cars to India by 2013. The company will launch its A-Class and B-Class cars in Europe by mid next year; it plans to bring them to India as completely knocked down (CKD) units in 2-3 years. But, it remained tight-lipped on the pricing of these cars.

Mercedes Benz India already has a sizeable portfolio of passenger vehicles in India: the C-Class, E-Class and S-Class. Its range of SUVs includes GL-Class, M-Class and R-Class. Its C-Class that starts at Rs 29.6 lakh is the cheapest and helps the volume game. It sold 3,800 units in the first six months of 2011 and expects to sell 7,000 units by the end of the calendar year. Affordable compacts may boost the company's sales in one of the fastest-growing auto-markets, helped by ever-growing purchasing power.

"Compact offerings by luxury car makers are doing well in China, and now they are looking at India for more growth," says Kotak Securities analyst Hitesh Goel. Daimler's Smart brand is selling large volumes of small cars in China. Smart, along with A-Class and B-Class is Mercedes' effort to transform itself from a luxury car maker into a full-range producer.

Can BMW be far behind? It will launch the 1-Series at the Frankfurt Motor Show. Rumour has it that the 1-series will also be brought to the Indian market soon, including a hatchback. The choices could drive you crazy.
(This story was published in Businessworld Issue Dated 01-08-2011)