10 years of Merc in India

PUNE: "You cannot sell worldwide and manufacture only in Germany," said Helmut Petrie, out-going chairman, DaimlerCrhysler India Pvt Ltd (DCIL).
Mr Petrie and the company''s newly designated chairman, Hans-Heinrich Weingarten, chairman, DaimlerChrysler India Pvt Ltd (DCIL) and executive vice president, Mercedes car group world-wide, indicated that over the next decade, the German-American automobile major would have to move production to more cost effective locations.
"We will have to move production to lower cost locations, as we have the shortest working time and the highest paid workforce in Germany. We have to manage this over a ten-year period, and as first step, could source more from such locations. Assembly will remain in Germany but in the long term, we could produce cars in lower cost locations. How we manage this in the next ten years is the question," Mr Weingarten said, touching a sensitive issue.
The entire management team of the luxury car maker, including former managing directors of DCIL, Dr Till Becker de Freitas and Mr Juergen Ziegler,were in Pune for the 10th anniversary celebrations. DCIL was set up as a joint venture with Tata Motors (then Telco), Mercedes Benz India Pvt Ltd (MBIL) on November 22, 1994. In September 01, it became a 100 per cent subsidiary and in Novem-ber of the same year, changed its name, to DCIL, reflecting the global change.
Tracing the journey, both, Mr Petrie and Mr Wiengarten admitted to the learning: the model they introduced, the W 124 (the E Class) was seen as an outdated model by discerning Indian buyers. The learning process also meant a loss making operation.
In its 10th year, DCIL is set to achieve a record profit before tax of Rs 45 crore on revenues of over Rs 500 crore, Mr Weingarten said. DCIL expects to sell between 1750-1800 cars by December 04 and sourcing of components from India is expected to be Euro 80 million. This includes the software exports from its research centre in Bangalore, apart from the forgings, rubber parts, wiring harnesses, brake systems, aluminium castings, sintered parts and other items it sources from Indian manufacturers.
Component exports from India are expected to touch Euro 100 mil-lion by 2006.
On new product launches during 2005, Mr Wiengarten said this will largely comprise upgrades of the existing models.
On the challenge posed by the entry of other German luxury brands, Porsche, BMW and Audi, Mr Weingarten said technologically all the German companies are on par but the positioning of each brand made the difference.
"All the German luxury car producers are competitive on the technology front. But what is behind the brand: is it attractive to customers? Is the service delivery good? The positioning of the cars is different; technology differences are not so high. The future is the brand," he said.
Hans-Michael Huber, managing director and chief executive officer, DCIL, said they had evaluated the Chrysler-Dodge-Jeep offerings for the Indian market. However, the CBU imports of the Cherokee and the Grand Cherokee would attract high duties, placing them in the Rs. 40-45 lakh price bracket. At which price point, there would be very few buyers.