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Mercedes-Benz broadens Indian reach to northeast

German luxury carmaker to tap locals' rising purchasing power

NEW DELHI -- Mercedes-Benz has expanded its Indian dealership network to the outlying northeastern region where income levels are rising thanks to active infrastructure development.

The German company opened its first dealership there in the state of Assam's biggest city, Guwahati, with local partner Axom Motors.

On the first day of business, the dealership delivered 20 vehicles to customers, including pre-orders. The 3,000-sq.-meter site also has service facilities, and will be positioned as a hub for further expansion in the region.

The Guwahati dealership marks a new milestone in India's robust growth story, says Roland Folger, CEO of Mercedes-Benz India. A little over 100 Mercedes vehicles are estimated to be on the road in the northeastern region now. The automaker expects the tally to double in a year.

The region's eight states -- Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Tripura and Nagaland and Sikkim -- are secluded from the rest of India, located north and northeast of Bangladesh.

Automakers had been cautious about entering the mountainous region because vehicles had to be delivered all the way from Calcutta on underdeveloped transportation networks. The regional population of a little over 45 million accounts for just 3% of the national tally. The states make up about 3% of gross domestic product.

Passenger car leader Maruti Suzuki India has only about 4% of its 2,000 or so dealerships in the region. Mercedes' dealership there contrasts with the 88 it has in the rest of India. Volkswagen's upscale Audi brand has 43 dealerships in India, but only one in the northeast.

But the region is gradually drawing more attention as residents' purchasing power grows thanks to active construction on roads and railways, an initiative led by the government of Prime Minister Narendra Modi.

Another factor is heavy air pollution in the capital of New Delhi.

From January to August of last year, vehicles with diesel engines bigger than 2 liters were not given registrations. More such measures could be taken.

Audi opened its first northeastern dealership in 2015. BMW is reportedly considering setting up shop in the region.

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