The newly opened production line at the Mercedes-Benz plant in Chakan, Pune has not only resulted in the doubling of the brand's annual production capacity but also given a shot in the arm to the German automaker’s manufacturing footprint in the country. Besides, the move comes at a time when Mercedes has witnessed a record growth and an ongoing strong demand for its luxury cars.
With production capacity at 20,000 units, the Mercedes-Benz Chakan plant is now India's largest installed luxury car production facility. With this number, Mercedes has left its rivals in the country far behind.
As of 2014, the BMW plant in Chennai could assemble 14,000 units per annum on a double shift basis while Audi’s plant in Aurangabad had a production volume of over 10,000 units on a single shift operation.
Eberhard Kern, Managing Director and CEO of Mercedes-Benz India said it was difficult to say when production would touch full capacity. But stated that since sales have grown by more than 40 percent in the first five months of the year, supported by Merecedes' sales of more than 10,000 units last year, they would touch full capacity in a short while.
Mercedes-Benz sold 3,566 units in India in the January-March quarter, up 40 percent from last year, and 11,213 units in fiscal year 2014-15, up 17.5 percent year-on-year; its highest ever.
Kern also sees the rapid growth of the luxury segment in India, with Mercedes' strong performance aiding it. In 2014, the volume of the luxury segment was 1.3 percent of the total car market in the country.
“In 2014, it used to be 1.3% or 33,000 units. It rose from 32,000 in the previous year. This year we see better development. I believe based on the very strong performance of Mercedes, with more than 40% growth, that total segment could reach 40,000 units,” Kern said.
The new line at Chakan is spread over 43,200 sq metres and is set up with an investment of
Rs 150 crore. Mercedes has also announced plans to assemble the GLA SUV at the Chakan plant. To prepare for the production of this new model, synchronised conveyor systems, new assembly lines, a new roller tester and shower tester were installed amongst other devices.
Interestingly, the production line has been built over two levels in order to make it cost effective, according to a company official.
Piyush Arora, Senior Vice President, Operations, Mercedes-Benz India said, “Our architects have designed the facility in a way that no material is moved up and down. Rather, the car goes down after it is made. Normally if there is material movement, then logistical movement can be very cost intensive, but here we have made our layout so that we can produce the car at one level and take it down for all other processes.” Hence, it was cheaper to use build a two level plant.
The German luxury carmaker began its India operations in 1994, and moved to its Chakan plant in 2009 with an initial investment of Rs 250 crores. The company has since increased its investment to Rs 1000 crore in the plant. Mercedes plans to assemble the CLA sedan at the Chakan plant later this year. However, the company hasn’t decided on the localization of the A- class and B- class models yet.
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