Mercedes plans bigger India play with greater localisation of parts

Mumbai: Mercedes-Benz is looking to leverage its supplier base in India to feed its global operations while deepening its manufacturing footprint in the country through greater localisation as it seeks to keep its leadership of this growing luxury car market. Ola Kallenius, global chairman at the German carmaker, told ET the company is on course for its highest-ever annual sales in India, if the current trajectory continues.

The maker of the E-Class sedan and GLE SUV sold 15,190 vehicles in India during January-September 2026, up 8% on-year.

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The company has announced an additional investment of ₹200 crore in India this year, taking its cumulative investment to ₹3,200 crore, Kallenius said. Though refraining from giving a detailed financial roadmap for India, Kallenius said the country could warrant an enhanced manufacturing commitment as economic growth and rising wealth creation expand the addressable market.

With annual sales of about 60,000 vehicles, the luxury car segment currently accounts for just over 1% of India's passenger vehicle market, he said. "At some point in the future, you reach an operating point where you can perhaps go part by part," said Kallenius. "That decision has not been made. Let me be absolutely clear that that's not the decision that we have made today."

Mercedes-Benz currently assembles more than 11 models at its 100-acre manufacturing plant at Chakan, Pune, using completely knocked-down kits. It also sources components locally, with Indian vendors supplying engines and axles for its vehicles. Kallenius, who described himself as an India believer, said Mercedes-Benz sees significant potential in the market in the coming five years and is looking to grow its presence across manufacturing, tech, engineering and sourcing.

On taking its Indian supplier base overseas, Kallenius said Mercedes could increasingly tap Indian suppliers and technology partners to support its global operations.

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"It's more likely than not that we will use India as a source also for a supply base outside of India," he said. India's engineering capabilities are another area of growing importance. Mercedes-Benz Research and Development India (MBRDI), which recently completed three decades of operations, is its second-largest engineering centre outside Germany, with expertise spanning mechanical, electrical, powertrain and software development.

Kallenius said the centre's importance in the company's global R&D network would increase. Mercedes-Benz India clocked its best-ever September quarter, recording a 6% growth at 5422 vehicles, setting the course for its highest-ever annual sales.