Mercedes-Benz is strengthening its Indian supplier relationships to serve global operations, with chairman Ola Kallenius identifying component exports as an opportunity that can grow ahead of any larger finished-vehicle export programme.
The company is building technology and supply partnerships in India for markets beyond the country, Kallenius said at a media roundtable in Pune. “We can, if you will, export out of India on a component basis before you ask the question on a full vehicle,” he said. “These tech partnerships and supply partnerships are going from strength to strength.”
Kallenius says full car exports are still under review
Asked whether free-trade agreements could support vehicle exports, the chairman of the Board of Management of Mercedes-Benz Group AG said reducing barriers improved the likelihood of cross-border business. “If you have less friction, the likelihood of an export transaction is higher.”
However, Kallenius pointed out that a larger manufacturing step would depend on domestic market growth and the emergence of the right product at the right price point. “I think that is more a question of when as opposed to a question of if. We have not made such a decision at this point in time.”
He welcomed the India-EU free-trade agreement as good news for both regions and for business, without announcing an export model, production commitment or volume target.
Kallenius estimated India’s premium-luxury vehicle market at approximately 60,000 units within an overall market of around five million. Mercedes-Benz’s sales of around 20,000 vehicles gave it a substantial share, but he said the company saw considerable room to grow.
Indian supplier base to support international operations
The first priority was to build on that domestic business. Based on India’s economic growth prospects, Mercedes-Benz expects to expand significantly over the next five to seven years. Alongside that growth, Kallenius wants to make greater use of the country’s supplier base for the company’s international operations.
India’s automotive supply industry was already strong and becoming more sophisticated, he said. Relationships with Indian suppliers could develop globally, much as Mercedes-Benz’s partnerships with suppliers from Europe, the US, Japan, Korea and China had done. “They’re worldwide relationships. They’re not confined to one region.”
The sourcing plans form part of a broader effort to increase India’s contribution to Mercedes-Benz. Kallenius said the company’s engineering operation would take on more responsibility alongside stronger supplier relationships and growth in domestic sales.
With its largest R&D centre outside Germany and more than three decades of local production experience, India already had the foundations for a wider role, he said. “India in the Mercedes world is a 360-degree play.”