Mercedes-Benz evaluating local assembly of EQ models in India

Mercedes is looking into the prospect of electrifying not just the higher segments, but also the entry-level luxury categories in the country.

Published On Jun 01, 2021 05:47:00 PM

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Mercedes-Benz evaluating local assembly of EQ models in India

Mercedes-Benz is stepping up its electrification efforts globally, with its international line-up set to feature as many as nine, full-electric models in the next few years. The German marque even became the first luxury carmaker to bring an EV to India, with the launch of the EQC in October last year, and the company is now evaluating the prospect of introducing further models. “We have not finally decided ‘when’ and ‘what’, but we will, for sure, take something (from the global EQ line-up) and also look into the possibility of local production,” Martin Schwenk, MD and CEO, Mercedes-Benz India, told Autocar India in a recent interaction.

Mercedes will launch the flagship EQS sedan in India next year
Company evaluating electrified models in lower segments as well
Local assembly of EQ models also on the cards

Mercedes mulling the EQ line-up for India

Mercedes already has the EQC SUV and EQV MPV on sale in international markets. Earlier this year, it took the covers off the EQA and EQB SUVs, as well as the range-topping EQS sedan. Moving forward, the company plans to add the EQE sedan, and the EQE and EQS SUVs to its global portfolio. And then there’s the EQT MPV that’s slated to debut in production form later this year. “So, the whole range is filling up now,” said Schwenk. Consequently, the company is mulling appropriate models for our market. “We are evaluating what works, based on what we have seen with the EQC (in India),” he added.

Autocar India has already revealed that the flagship EQS sedan will come to the Indian market sometime early next year. Alluding to the launch, Schwenk said that the EQS is a “strong possibility for the brand” in India. “I have actually no doubt that it (EQS) will be (launched) in many markets, and India could be one of them as well,” he continued.

Martin Schwenk, MD and CEO, Mercedes-Benz India: The EQS will have a very strong traction here, but I would not discount other options which we also have. There is also an EQB, that’s a possibility too.

Battery electric vehicles carry a significant mark-up over their internal combustion engine (ICE) counterparts, so it could be prudent to electrify high-end models first, especially with the entry-level luxury segment in India being pretty cost-sensitive. As such, a case can be made for adopting a top-down approach for expanding the EQ line-up. However, the Mercedes India chief stressed that the company is looking into all segments. “There is a chance to do something in every segment,” he said. “I don’t think we can ever say that we have to look at a top-down strategy only.”

“I think it is very conceivable that it (EQS) has a very strong traction here, but I would not discount other options which we also have.” Elaborating further, he added, “There is also an EQB, which I would not exclude. That’s a possibility too. So, give us time to see.”

Brought in as a full import, the EQC is currently priced at Rs 1.04 crore (ex-showroom, India). Introducing an electric model below the GLC-based EV could allow Mercedes to find more buyers for its EQ range. The company will, however, have to get the price right, which is something it could achieve with local assembly.

Policy support for and customer interest in EVs on the rise

Government’s support for electrification has spurred Mercedes’ EV plans further. “We definitely have traction on the policy side,” said Schwenk. Incentives, like a lower GST and a complete waiver of road tax in many states, are already providing a fillip to EV adoption.

Moreover, the Mercedes-Benz India MD noted customer interest in EVs, even before the EQC had made landfall here. “We got quite a few questions before we even launched the EQC: “What is Mercedes doing on the electric (side)? What’s coming? We want to have cleaner cars.” So while we were trying to focus on our BS6 engines, we could clearly see that there is a customer group developing (for EVs).”

Commenting on the growth of the EV sector, he said, “We think there is growth in it and we have products which will hit the customer in a very positive way, like we have seen on the EQC.”

Strong customer response to the Mercedes-Benz EQC

Schwenk mentioned that the company’s first attempt at an electric vehicle – the EQC – has been received well, and this will shape its EV strategy moving forward. However, he added, “It is a niche vehicle to basically open the market and be there for customers who really want to go electric now.”

Since its launch, the EQC has been retailed in just Delhi, Mumbai, Pune, Bangalore, Chennai and Hyderabad. But the company is working on expanding the network. “Though we started selling only in six metro areas, we will bring in all dealers in the foreseeable future, and then, we’ll gear up slowly, but surely, to also be able to sell other (EV) models,” said Schwenk.

Taxation remains a challenge

The Mercedes India head mentioned that taxation continues to be an issue, especially with full imports. “CBUs (completely built-up units) are still a significant hurdle, because there is no advantage for bringing an electric CBU versus an ICE.” He said that any reduction on the CBU import of electric cars would help grow the local market. “I hope that there would be a differential in terms of import duties (on EVs and ICE cars) because that could help us bring in cars, see how they work, get some volume and start localisation.”

Moreover, he mentioned that the current incentives on GST and road tax must continue. “For electric cars, you definitely need (policy) stability.”

There are a few other challenges that remain. Even in the luxury segment, electrification is far from mainstream, with an EV generally being the second or third vehicle in the household. Schwenk added that the “overall pandemic and supply chain situation aren’t helping faster adoption either. But if you take a look bit beyond this year, then, I think, there is a real chance that we find good solutions.”

Also see:

Mercedes-Benz to push for EVs, not hybrids in India

Mercedes-Benz to debut six EQ models by the end of 2022