Changing gears: Mercedes-Benz turns growth wheel towards ultra-luxury

Despite a 2.8 per cent fall in 2025 volumes, Mercedes-Benz India reported its best-ever revenue and profitability, led by top-end models, AMG growth and higher BEV mix

In a year when India’s luxury car industry grew a modest 1.6 per cent to around 52,000 units, and market leader Mercedes-Benz India saw volumes decline by nearly 3 per cent, the German luxury carmaker posted its best-ever revenue and profitability in its 25-year history in the country. The performance underscores the company’s strategic pivot towards top-end luxury vehicles, even as broader market growth remained muted.

 

Industry volumes are expected to remain largely flat in 2026, with global headwinds and foreign exchange (forex) volatility continuing to weigh on demand.

 

Mercedes-Benz India delivered 19,007 cars in 2025, down 2.8 per cent from 19,565 units in 2024, which was its best-ever sales year in India. Despite the volume decline, Santosh Iyer, managing director and chief executive officer (CEO) of Mercedes-Benz India, said 2025 marked the company’s strongest year yet in terms of both revenue and profitability.

   

This achievement is impressive given that the euro depreciated 19 per cent against the Indian rupee during the year. Mercedes-Benz implemented three price hikes in the first half of the year, totting up around 6 per cent, before goods and services tax (GST) rationalisation in September led to a 6 per cent price reduction, making the net impact neutral for customers. This month, the company took an extra 2 per cent price hike. Even so, Iyer said around 10 per cent of the forex impact has not been passed on to customers, continuing to exert pressure on margins.

 

While the company did not disclose revenue or profit numbers, it said sales of top-end vehicles (priced at ₹1.3 crore and above) grew 11 per cent year-on-year and accounted for 25 per cent of total volumes. The AMG portfolio posted 34 per cent growth, while battery electric vehicles (BEVs) grew 12 per cent. Surprisingly, 20 per cent of all top-end vehicles sold were BEVs, or put differently, 70 per cent of BEVs sold in 2025 were priced between ₹1.25 crore and ₹3.1 crore.

 

Entry luxury models (₹45–60 lakh) accounted for 13 per cent of sales, while core luxury vehicles (₹65 lakh to ₹1.2 crore) contributed 62 per cent of volumes in 2025.

 

“Profitability is under stress due to exchange rate movements. We have not fully covered the forex impact, but our business model remains sustainable. We have the lowest discounts in the market, which supports profitability and residual values for customers. Compared to peers, we remain among the most profitable,” Iyer told Business Standard. He added that 2025 was the company’s best-ever year in terms of revenue, while profitability figures will become clearer once the quarter closes.

 

Mercedes’ entry luxury portfolio declined 20 per cent year-on-year, reducing its share to 13 per cent of total sales. Iyer said this was in line with Mercedes-Benz’s decision to stay out of aggressive price competition. “First-time luxury buyers are far more price-sensitive. Repeat luxury customers continue to buy, but first-time demand has softened due to frequent price changes. After the GST announcement, we saw a spike in September, but that momentum did not sustain,” he said.

 

In 2026, Mercedes-Benz plans to introduce 12 new cars in India, including all-new models with no predecessors, along with several facelifts. Many of these launches will comprise top-end vehicles and new BEVs.

 

While Mercedes-Benz continues to prioritise value — revenue and profitability — over volumes, rivals are increasingly targeting first-time buyers to expand the overall market.

 

BMW Group India, for instance, closed 2025 with its highest-ever sales of 18,001 cars, marking 14 per cent year-on-year growth and outperforming the broader luxury car market. According to BMW, growth is being driven largely by first-time luxury buyers. Hardeep S Brar, president and CEO of BMW Group India, said the share of first-time luxury customers rose from about 43 per cent in 2024 to nearly 49 per cent in 2025, with some models recording even higher ratios.

 

At Mercedes-Benz India, around 60 per cent of buyers are repeat customers, while 40 per cent are first-time Mercedes owners — a mix that has remained largely unchanged over the past two to three years. 

   

India joins top 5 global mkts for Maybach GLS assembly

 

Mercedes-Benz India has commenced local production of the Mercedes-Maybach GLS at its Pune manufacturing facility, making India the first market outside the US to locally assemble the ultra-luxury sport utility vehicle. India has entered the top five global markets for Mercedes-Maybach.

 

Localisation of the Maybach GLS will deliver customer benefits, including faster delivery timelines and improved accessibility. Most notably, it has enabled a sharp price reduction, with the Maybach GLS now priced at around ₹2.75 crore, compared with nearly ₹3.2 crore earlier. The price benefit primarily stems from duty advantages, as the model now operates under a local duty structure instead of import duties of 110 per cent.

 

The Mercedes-Maybach GLS debuted in India in June 2021 and, until now, was retailed exclusively as a completely built unit import.