Delhi diesel ban a threat to Mercedes-Benz India's pole position

Mercedes-Benz India, which emerged as the luxury car market leader in 2015, is weary that the focus on punishing diesel for pollution in India may throw a spanner in its works.

After posting record sales of 13,502 units in 2015, or a 32 percent growth over the previous year, Mercedes-Benz India says the ability to sustain its performance will also depend on the policy regarding diesel vehicles. Sale and registration of diesel vehicles with engines of 2000cc or above are currently banned in Delhi till March 31, 2016. "It all depends on what is going to happen with diesel now, if this diesel issue and the disruption thereof should be extended over March into April and subsequent months. If the diesel issue should go into other cities as well, nobody knows what is going to happen," Roland Folger, MD & CEO, Mercedes-Benz India, told Autocar Professional, on the sidelines of the launch of the GLE 450 AMG Coupe.

However, Folger is also "optimistic" because the Supreme Court, which passed a judgement in favour of the ban, is ready to hear the arguments made by a group of OEMs including Mercedes-Benz India. After hearing a plea by the OEMs on January 5, the apex court upheld the ban while asking  them to furnish documentary evidence to furnish their claim that new diesel  vehicles are not as polluting as they are made out to be. The next hearing is on January 20.

The diesel ban has hurt Mercedes-Benz the most as all its diesel engines are above 2000cc, while its immediate competitors are not so badly affected – Audi has 3 models/variants and BMW has 6 models/variants. The affected market contributes to 20 percent of Mercedes-Benz India's overall sales, and 70 percent of that are diesels. "Pushing more petrol is the solution in the short term again because that is the only thing that we can do," says Folger.

Though a lack of a long-term policy may adversely impact investment decisions, Folger isn't rethinking his company's investment plans, but has reported the new "risk" of doing business to the bosses at Mercedes-Benz's global HQ in Stuttgart.

Leapfrogging BS-V a welcome move

While the ban has posed a risk to Mercedes-Benz's drive in India, the recent decision by the government to fast forward the implementation of Euro VI is a step that the German OEM would "applaud". " That is something that we can really applaud because it gives us, basically most of the manufacturers that sell or produce anything in Europe or for European market, a chance to contribute something," says Folger.

Even as these developments take place, Mercedes-Benz India has embarked on its growth plans for 2016. This year the OEM plans to have one new offering every month on an average. GLE 450 AMG Coupé, the first of them was launched today, with a price tag of Rs 86.40 lakh, ex-showroom, Mumbai.