[Joxster]

This is a big and bold move from Mercedes-Benz! Based on the success, it could lead to others following suit as well. I hope they keep stringent quality controls in place .

While the U.S. industry is transfixed on the rise of China as a critical market and manufacturing base, another Asian country is stepping onto the stage: India. Mercedes-Benz will begin importing its best-selling vehicle, the GLC compact crossover, into the U.S. from its plant in western India, Automotive News has learned. The German luxury automaker joins Ford Motor in tapping India as a source for U.S. vehicles, underscoring the subcontinent's rapid ascent as an auto export hub. Ford last year began importing its EcoSport subcompact crossover from Chennai. General Motors, meanwhile, thwarted in its efforts to develop an Indian sales base, has converted its Indian automaking capacity to an export base, but it has given no indication that it would export to the U.S. The sudden appearance of vehicles from India comes as U.S.-Chinese trade relations roil over punitive tariffs on vehicles and auto parts. It also occurs as the Indian domestic market struggles and Indian factories are faced with overcapacity.

Deliveries of the Mercedes GLC, built at the automaker's plant in Pune, will arrive in the U.S. next month, Mercedes-Benz USA spokesman Rob Moran confirmed last week. "The SUV GLC is in great demand worldwide," Moran said. "Therefore, Mercedes-Benz uses the capacities of its global production network on four continents. This also includes the Mercedes-Benz plant in Pune."
Mercedes has informed NHTSA of its import plans.

The notion of importing vehicles from India arose a decade ago when Mahindra & Mahindra — at that time an Indian military vehicle builder — inked a deal to export a somewhat rough-hewn small diesel pickup to the U.S. through an independent distributor. Retailers asked for numerous quality improvements before they could sell the pickup, and the import deal collapsed before the vehicle was certified by U.S. regulators. The picture has changed significantly since then.

The GLC is the highest-selling luxury compact crossover in the U.S. and the top-selling model across Mercedes' brand lineup. GLCs sold in the U.S. are currently built in Bremen, Germany. There are no plans to produce the crossover in the Mercedes factory in Vance, Alabama.

Analysts believe India has a shot at playing a bigger role now. Mercedes' move could turn the spotlight onto its auto manufacturing potential, predicts Brian Johnson, managing director at Barclays Capital. "It will help establish supply chain and production infrastructure that can meet North American and European quality standards," he said. But importing vehicles from India to the U.S. remains an "experiment" more than a trend, Johnson said. "India has been seen by the global automakers as a difficult place to establish a quality supply chain," he said. "This could very well be an effort to learn about India as an export hub." Still, India's auto sector has significant growth opportunity as middle-class incomes rise and consumers gravitate from two-wheelers to cars and now crossovers.
"It's very possible that there could be more capacity development for light vehicle in India," said Richard Hilgert, senior equity analyst for Morningstar. "With the increase in capacity, there could be opportunities for export."
Exports could become a fundamental part of the equation for automakers with Indian plants. So far, some automakers are finding it challenging to support auto plants there with domestic sales only. If production capacity cannot be sustained with domestic demand, it makes sense to shift that capacity to exports, Johnson said.

That is clear at Ford's Indian subsidiary, where exports, not domestic sales, are driving production volumes. "Export is one of the key pillars," Anurag Mehrotra, president and managing director at Ford India, told the Indian newspaper Business Standard. "It gives us economies of scale allowing us to bring more features at competitive costs for the Indian market."

The situation is even clearer for India's luxury vehicle operations. Exporting several thousand GLCs will be helpful to the profitability of the Mercedes' Pune plant while meeting rising U.S. demand for the vehicle, said Sam Fiorani, vice president with AutoForecast Solutions. The cost of shipping GLCs to the U.S. from Pune is higher than from Bremen, but the overall economics are tempered by other costs, including lower labor rates in India.

The move could also help automakers hedge against trade troubles around the world. The industry is witnessing rising uncertainty around the potential of U.S.-imposed import tariffs. The Trump administration has threatened a 25 percent tax on cars that come into the U.S. from the European Union. And the road to China, a major global auto manufacturing center now, is already getting bumpier thanks to trade war tensions with the U.S.

Source

Cheers

[ajmat]

Am betting this is a trial run before exporting the forthcoming GLE and GLS models which are doomed under the existing trade war

[V.Narayan]

Brilliant. Wonderful news. In the 1960s JRD Tata had discussed with Mercedes to build Merc's in India under license and export parts to West Germany. Sadly the Nehru Govt and bureaucrats shot down the proposal. Happy to see this happen and now without interference from bureaucrats.

[libranof1987]

This may not just be about the trade war with China but even Trump's unhappiness over the automobile import/export imbalance with Germany.

President Donald Trump is hoping to effectively ban sales of Mercedes-Benz, Audi, and other German cars, according to reports from a German magazine.

A report in WirtschaftsWoche cites unnamed diplomatic sources who say Trump told French president Emmanuel Macron he would maintain his trade policy “until no Mercedes models rolled on Fifth Avenue in New York.” The trade policy would seemingly affect any German automaker, though, putting sales of Porsche and Volkswagen (and its Audi luxury division) at risk as well as Daimler.

Trump began pushing for heavy tariffs (as much as 25%) on car imports a week ago. U.S. Commerce Secretary Wilbur Ross said at the time “there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”

http://fortune.com/2018/05/31/trump-...erman-car-ban/

Originally Posted by V.Narayan

Happy to see this happen and now without interference from bureaucrats.

A good development, yes. But eccentric and unpredictable that Trump is, he can use this against India once the exports get big enough to be noticed.

[ajmat]

Trump needs to remember the investments that Germany have made in the impoverished belts of Alabama and North Carolina. He is killing those places

[directinjection]

Originally Posted by V.Narayan

Brilliant. Wonderful news.

Sorry if I sound negative but what will be the local content of these cars? If other than battery and tyres, every part is to be imported from Germany, then it is hardly a matter of brilliance.

Originally Posted by V.Narayan

In the 1960s JRD Tata had discussed with Mercedes to build Merc's in India under license and export parts to West Germany. Sadly the Nehru Govt and bureaucrats shot down the proposal. Happy to see this happen and now without interference from bureaucrats.

Even I've heard this story multiple times right from the early 1970s. However, I could never locate any tangible information on the subject and suspect it was just a rumor. In fact the car that Tata really wanted to build in the 1960s was the DKW Junior. Tata had submitted a proposal to Govt. which had invited offers from industry for making a small, people's car. However, the matter could not be taken forward as: (1) Daimler sold off the Auto Union business (which made DKW) to Volkswagen in 1965 and (2) the matter of producing a new car (that would have involved foreign currency outflow for technology import) probably lost priority due to the food crisis of 1960s that forced us to import foodgrains from US under PL 480.

From the 1960-61 annual speech of TELCO Chairman JRD Tata:

In my statement last year, I discussed at some length the project for an economy car in regard to which we had put forward to Government proposals for the manufacture of the DKW-Junior under licence from Messrs. Auto-Union, an associate company of Messrs Daimler-Benz. Nothing has come of this scheme nor is it likely to materialise in the future as the Government of India seem to have decided, on grounds which are yet to be justified publicly, to manufacture such a car themselves. It remains to be seen whether the public will in due course get from the Government project a good, durable and economical small car at a price anywhere near Rs. 5,000 or Rs. 5,500 as indicated by Government.

More about DKW Junior here:

https://en.wikipedia.org/wiki/DKW_Junior

[ajmat]

Originally Posted by directinjection

Sorry if I sound negative but what will be the local content of these cars? If other than battery and tyres, every part is to be imported from Germany, then it is hardly a matter of brilliance.

Well, a lot of it will be labour content.

Panels might be assembled into body shells
Engine assembly - currently done by Force motors
A lot of engine ancilliary components are made here
Some bigger items like seats and interiors are made here
Larger volumes will make it attractive to make more components here

[V.Narayan]

Originally Posted by directinjection

Sorry if I sound negative but what will be the local content of these cars? If other than battery and tyres, every part is to be imported from Germany, then it is hardly a matter of brilliance.

Very relevant question. I believe it could get up to 50% quite soon given that MB India already has some ancillary vendor base here.

With regard to Tata & MB making cars here - that is what I heard from the old guard in Bombay House 35 years+ ago when I worked there as a flunkey's flunkey.. It was something that happened c.1960 but I have no proof.

[GTO]

Wow! A brand that people once thought would primarily be an importer will now start exporting a car to the biggest market of the world .

Originally Posted by directinjection

Sorry if I sound negative but what will be the local content of these cars? If other than battery and tyres, every part is to be imported from Germany, then it is hardly a matter of brilliance.

Even 'Indian-made laptops' have a large amount of Chinese parts.

While I still agree with your point, an Indian Mercedes can never have 99% localisation like say - a Maruti - simply because the luxury car market is too small (Mercedes does ~15,000 a year). Localisation is unsustainable with such a small number of sales.

[varunsangal]

Originally Posted by directinjection

Sorry if I sound negative but what will be the local content of these cars? If other than battery and tyres, every part is to be imported from Germany, then it is hardly a matter of brilliance.

The local content may not be extremely low. A lot of ancillary industries always come up alongside such plants.

Value addition is the biggest business there is. Much like the Rs.20/kg Maida becomes a Rs.700 family size pizza, assembling a car with imported parts is a great win as well.

There is a lot of employment and upskilling for the local population, a lot of addition tax revenue for finished goods is generated.

[androdev]

Btw batteries and tyres of these cars are also imported.

Mercedes is trying to integrate Pune plant into its network of production sites to deal with hostile market dynamics due to trade wars and what not.