Mercedes-Benz calls India a ‘priority market’, vows to keep investing despite impending EU-India FTA

Mercedes-Benz has reiterated its commitment to India, calling it a ‘priority market’ and confirming that none of its investment plans, including boosting local production, have been put on hold despite the impending EU-India free trade agreement (FTA).

Speaking on the sidelines of the IAA Mobility Show, Mathias Geisen, Member of the Board of Management of Mercedes-Benz Group AG, said the company has considered multiple scenarios based on potential outcomes of the trade agreement but remains firm in its India strategy.

“We haven’t put any plans on hold compared to what we had originally,” Geisen said when asked if the carmaker was delaying investments in CKD (completely knocked down) facilities until more clarity emerges on the FTA.

India a high-growth market

Geisen described India as a “very important growth market” where Mercedes-Benz operates its own product facility. “With the products we have in the pipeline, we can address this market pretty well. We always look into where localisation makes sense, and India is definitely on our priority list,” he added.

The company sold 19,565 units in India last year, its best-ever annual performance in the country, cementing its position as a leader in the Indian luxury car segment.

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EU-India FTA talks

The European Union remains India’s largest trading partner, with bilateral trade in goods reaching USD 135 billion in 2023–24. Both sides are expected to hold two crucial rounds of negotiations in the coming weeks to resolve differences over rules of origin, market access, and tariffs on wine and dairy products.The 13th round of negotiations will take place in New Delhi, followed by another round in Brussels in early October. Talks on 11 chapters, including customs, trade facilitation, digital trade, dispute settlement, and small enterprises, have already been concluded. However, negotiations on key issues such as rules of origin and market access are ongoing.

Competition heats up

Geisen noted that competition in India’s luxury car segment is intensifying, with more automakers investing in local production as they recognise the country’s long-term growth prospects. “We are leading, which is nice, but it’s getting tougher. Other OEMs are also realising that India will be a strong growth market,” he said.

Diesel, EVs and flexibility

Addressing speculation about phasing out diesel engines, Geisen confirmed that Mercedes-Benz has no plans to discontinue them. On the slowdown in global EV sales, he said customer adoption remains unpredictable as it is heavily influenced by infrastructure, regulation, and incentives in each region.

“It is so regionally driven, so incredibly different, region by region… we will not predict any numbers any longer,” Geisen explained. “We’ll ensure our strategy gives us full flexibility to adapt to any scenario when it comes to electric mobility.”

The company has also upgraded its internal combustion engines to meet EU 7 emission regulations. “Our ambition is to lead in whichever segment we compete, combustion or electric, by offering the best product,” Geisen said.

Inputs from PTI

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