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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3665)	2/6/1999 2:04:00 PM
From: Mohan Marette	Respond to of 12475

Mercedes Benz (India) Ltd- "We are here for the long haul." Car sales to pick up speed: Mercedes India chief K S Nayar -------------------------------------------------------------------------------- NEW DELHI 5 FEBRUARY DAIMLER-CHRYSLER, which has become the world's third largest automaker with sales of over $155 billion after the merger, is unfazed by the current slowdown in the Indian passenger car market, saying things are bound to look up. Till Becker de Freitas, managing director and chief executive officer of Mercedes-Benz India Ltd. (MBIL), said the auto sector "has not taken off because of the general downturn in the economy". "For the time being it has a slowdown," De Freitas said. "The feel-good factor is missing in India. This is a very important factor for all kinds of heavy investments such as in the auto sector." In the first eight months of the 1998-99 financial year (April- March), just about 270,000 cars made by a dozen automobile manufacturers were sold, a decline of 3.6 per cent over the corresponding period of the previous year. The high-end car segment was the worst hit, recording a 60 per cent drop in sales. With the entry of global automobile makers, India has built up an annual manufacturing capacity of one million passenger cars. De Freitas is unfazed by the current slowdown and asserted that Mercedes-Benz will remain strongly committed to India. "We are here for the long haul," he told India Abroad News Service. "We will try to grow in the future. For the time being we can be present here with the E-class because we have a solid base. We have a big asset base and we have a fantastic network of dealers." Although the automobile sector is badly hit by the current economic situation, there are other manufacturing sectors that are doing well, he noted. "In fact a lot of companies will do very well and even better than a year before. Therefore, one must have a feeling that we (auto sector) can also hope to have some revival," he said. De Freitas said one way to revive the auto sector would be to introduce an exchange scheme for old cars against new as was being done in many countries. That would also address the problems of environmental pollution from automobiles. "If you have a car which is more than 15 years old, it naturally does not fulfil the emission norms that are in vogue today. The exchange scheme should encourage replacement of these old polluting cars. This can be encouraged by offering tax advantages for purchasing of low-emission vehicles," he pointed out. Another move could be to slash the excise duty to 40 per cent which will have a multiplier effect on other taxes and push up revenue collection. "Today the taxes come to about 74 per cent. I believe the government is thinking of cutting it down to an average 25 per cent," he said. There is a healthy demand for Mercedes-Benz's diesel model, De Freitas said, adding that these cars are becoming popular not only because they are cheaper to run, but because they are more environment-friendly than gasoline-driven cars. About 65 per cent of Mercedes-Benz cars sold in India are the diesel version. He said modern diesel technologies have cleaner emissions. De Freitas said the proposal of the Delhi government to stop all diesel vehicles from the year 2000 is a wrong step. "The modern diesel engine is far more environment friendly than the gasoline engine. The Delhi government should take all the old polluting cars out of the market. For that to happen the government has to offer some incentives." He said the company is currently examining the possibility of introducing in the Indian market models from the enlarged portfolio of vehicles available following Daimler Benz's $42-bn merger with Chrysler. "Now we have a whole product range to look at. We have started slowly looking at whether there could be any adequate product for the Indian market," De Freitas said. This would require revival of the market which is possible only if the government initiates innovative fiscal policies. De Freitas said MBIL has made an investment of Rs 6 billion ($142 million) in its India operations for the "time being," leaving the option to bring in more funds when that is needed. "We have also invested in our vendors so that they produce world class components," he said. In Telco, the flagship company of the industrial house of Tatas which produces trucks and the indigenously developed passenger car Indica, MBIL has invested 10 per cent in the equity while Telco has 14 per cent in MBIL's equity. "We are both a financial partner and investor in each other," De Freitas said. MBIL has three product lines, the S-Class, the new E-Class and a completely new range of 12-seater luxury buses costing Rs 3 million and currently being imported from South Korea. The bus is being targetted at tour operators, hotels and for weekend family outings.-IANS economictimes.com