Daimler Plans $78 Million Mercedes-Benz India Plant Expansion to Add Sales

Daimler AG plans to invest as much as 3.5 billion rupees ($78 million) to expand its India factory that builds Mercedes-Benz cars as demand for luxury vehicles gains in the nation.

The automaker is adding a second production shift starting today at its Pune, western India facility to double the plant’s capacity to 10,000 vehicles a year, said Suhas Kadlaskar, the local unit’s director of corporate affairs. Daimler will spend 2 billion rupees on a paint shop that will be ready in 2012, he told reporters at the factory.

Daimler, Bayerische Motoren Werke AG and Volkswagen AG’s Audi division are seeking to tap rising demand for premium brands in India, where economic growth and stock market gains spur spending on luxury. The nation’s market for luxury goods and services is projected to triple to $14.7 billion by 2015, according to an October report by the Confederation of Indian Industry and A.T. Kearney Inc.

The world’s second-largest luxury-vehicle maker expects Mercedes-Benz sales in India to rival the U.K. within a decade as rising wealth stokes demand, Wilfried Aulbur, head of the local unit, said in September.

Daimler’s passenger vehicle sales in India increased 79 percent from a year earlier to 3,827 units between April and November, according to data compiled by the Society of Indian Automobile Manufacturers. BMW’s sales rose 72 percent to 4,031 vehicles in the period, according to the industry group.

$6.4 Trillion

The combined net worth of India’s 100 wealthiest people climbed to a record $300 billion this year, equivalent to about a quarter of India’s gross domestic product, according to Forbes. India’s wealthy may almost double their assets to $6.4 trillion over the next five years as economic growth swells their ranks, Credit Suisse Group AG said in a report in October.

Tata Motors Ltd., the owner of Jaguar Land Rover, will set up 10 dealerships for the luxury car brands in India this fiscal year and begin assembling the sport-utility vehicle models in the country from the middle of next year.

India’s finance ministry yesterday raised its economic growth forecast for the current financial year. The economy may expand as much as 9.1 percent in the year ending March 31, the ministry said in a report to parliament. It had projected a growth rate of 8.25 percent to 8.75 percent in February.

The benchmark Sensitive Index of the Bombay Stock Exchange gained 13 percent this year, the best performer among the world’s 10 biggest stock markets.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.

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