Mercedes Benz banks on South India after Supreme Court ban on large diesel vehicles in the north

Sales of Mercedes Benz had become uncertain in India following the December 2015 ban on large diesel vehicles by the country's Supreme Court. The court had banned registration of diesel cars and SUVS with engines above 2,000cc across the national capital region (NCR), which includes the country's capital, New Delhi, and urban areas of surrounding states such as Haryana, Uttar Pradesh and Rajasthan.

While the ban was originally until March, it has been extended to July, after which the court is expected to decide on whether or not to prolong it. Rolger Folger, chief executive at Mercedes Benz India, had even recently expressed concerns over the ban. "Looking into the future, this is extremely difficult mainly because we don't know what is going to happen now. The big question is what is going to happen after July", Folger had said.

The German luxury car maker, however, hopes to achieve good sales from the southern part of India, where there is no such ban, Boris Fitz, director of sales & network development at Mercedes-Benz said. Fitz, who was in the city of Chennai for the launch of the Mercedes-Benz GLC, its latest luxury sports utility vehicle, said: "We are banking on markets like the south to outperform the rest of the country. We are confident that the southern market will help us in our growth story as we prepare for a host of brand and service initiatives in coming months."

Fitz said, "The southern market including Chennai has emerged as a key one for the company and has registered a growth of 24% in the first quarter of 2016 (a total of 3,622 units were sold in India between January and March 2016). Mercedes-Benz has strengthened its footprint in the five southern states with 23 outlets located across 10 cities. This underlines its growing importance", Indian business publication Livemint reported.

Mercedes Benz has sold a total 13,558 units in India in fiscal year ending March 2016. This marked a 21% increase from its previous financial year. "In spite of a lot of uncertainties in India, Mercedes-Benz has been able to maintain the same level as last year. The last fiscal has been the best year ever for us," Fitz said.

He also revealed that sales from South India in the first quarter of the current fiscal grew 24% on-year. He highlighted that the state of Tamil Nadu alone saw sales increase by 30% from a year ago. He, however, added that in order to capitalise on the growing demand, the company was in the process of changing the product line-up apart from bringing in more petrol cars to the country.

This follows a recent announcement by Daimler, the parent company of Mercedes Benz, stating it will spend €3bn (£2.35bn, $3.40bn) to curtail the pollution levels of its diesel exhaust vehicles. Daimler proposed to do so by modifying its engines and exhaust treatment systems apart from updating the software in some of its Mercedes-Benz passenger cars.