Production rise: In a move to sustain its expansion efforts in the national luxury car market, Mercedes-Benz plans to double installed capacity at its Pune factory to an annual strength of 40,000 units.

This decision although in its early stages, will see the company double its annual installed capacity at its factory located outside Pune from the existing capacity of 20,000 units.

This will be the first major exercise undertaken by a major luxury carmaker to expand its footprints in India, as demand for premium cars starts to rise faster than the broader market.

Santosh Iyer, MD & CEO of Mercedes-Benz in India, said the company is locked in to "identify and look at" future expansion needs as sales move towards its peak capacity.

Expansion push

"While we are fully focused on 2024 right now, we will need to expand if the existing growth rates continue," he said, on the backdrop of an annual 10 per cent sales growth to 17,408 units for 2023 as against 15,822 units sold in 2022.

After a three-decade presence in south-Asian nation, the German automotive major remains bullish on the luxury market, which hit record highs of about 47,000 units last year.

The luxury and commercial vehcile maker also plans on introducing dozen new cars in 2024, including three electric vehicles.

The company is also looking to infuse over Rs 200 crore towards manufacturing operations, new product startups, digitisation, which will take place at the auto major's 100 acre Pune factory, a senior company official said.

"We will see how this year goes and only then take a call on doubling capacity." Iyer said.

The country's automobile market is showing signs of sustained robust demand, especially as the average selling price of its vehicles has gone up from Rs 57 lakh in 2018 to Rs 88 lakh last year, as per media reports.

"This is not aspirational consumption, but true luxury consumption. We are very much focused at the top-end of the luxury market," he said, citing media reports.