Mercedes may manufacture engines , gear boxes in India

German auto giant Mercedes-Benz is contemplating a possibility to set up a plant to manufacture engines, gear boxes and other components in India at a whopping investment of Rs 2,500 to Rs 3,000 crore. While the company is yet to finalise the plans, the lower cost of manufacturing in India has made the company give a serious thought to it.

Mercedes-Benz bus business head Harald Landman said this after launching company's intercity luxury bus in Pune. Assembled at Sutlej Motors in Jalandhar, the Rs 80 lakh bus will compete with its swiss-counterpart Volvo in the fast growing Indian luxury bus segment.

Speaking to reporters after the launch, Landman said, "We are yet to figure out, when the entire bus building operation, including development of engine and gear boxes, will happen in India. However, we are looking at a possibility to set up a manufacturing unit over next three to five years." While Landman did not disclose the location to set up this unit, officials close to the development hinted at Pune.

"As Mercedes is setting up its new facility at Chakan near Pune, the manufacturing plant has to come up in the same region. Since Pune has a strong automobile component industry, the unit has to come up in this region," an official stated. Once the company darws a concrete plan for this Rs 2,500 crore project, then it will approach government of Maharashtra for approvals. "We might explore other states to set up this manufacturing unit, provided, things do not work out in Maharashtra," he added.

Elaborating the business plan for the newly launched bus, Landman said, "Mercedes-Benz enjoys a 17 per cent market share in global luxury bus market. We have built the new bus on our versatile O500 R/RF chassis being developed at Pune plant. While most of the components are being imported Brazil unit, the body building will happen in Jalandhar through an agreement with Sutlej Motors."

When asked about Indian luxury bus market, Mercedes-Benz India Managing Director Dr Wilfried Aulbur said, "The luxury bus market is growing in India. Volvo, so far the only significant player in India has sold some 350 buses last year. Our plan is to earn a significant market share within the first year."