Mercedes-Benz will stick to top-end luxury cars even as BMW closes in

Pune: German carmaker Mercedes-Benz will stick with top-end luxury cars and won’t chase volumes in India even as its leadership in the domestic market faces intense challenge.

Mercedes sales in India declined 3% to 19,007 in 2025, remaining the largest seller of luxury cars priced above ₹50 lakh. While it continued its decade-long run at the top, German peer BMW closed the gap with 14% growth to 18,001 units during the year.

Still, Mercedes will not join the race to sell more entry-level luxury cars in a bid to chase volumes, Santosh Iyer, managing director and chief executive at Mercedes-Benz India, said in an interview.

India records around 50,000 to 52,000 luxury car sales annually, with Audi and Jaguar Land Rover competing alongside Mercedes and BMW. Porsche and Lamborghini also sell their high-end cars in India.

“If you go back exactly 14 years, we have seen the same playbook of significant lower-end cars coming in, lower premium cars coming in. We stuck to our strategy,” Iyer said, adding that the company is present in the entry-level segment, but rivals’ aggressive discounting has dissuaded it from price wars.

“The biggest impact of all this price war is the residual value impact that you see and brand dilution, which many brands have experienced in the Indian market,” Iyer added.

Different from BMW

The strategy differs from that of BMW. The company earlier told Mint in an interaction that it is working on expanding the luxury market by bringing more first-time buyers who previously owned cars priced between ₹15 lakh and ₹25 lakh.

According to Iyer, the growth driver is different for Mercedes.

“Around 60% of our sales are coming from luxury dwellers who own multiple luxury cars. We also saw many first-time buyers straight jump into core luxury segment instead of entry-level luxury,” Iyer said.

Gaining market share through aggressive pricing will not expand the market, as it eventually requires offering value products and retaining brand value, he said.

“It’s not healthy in the long run because that playbook, if it were growing the market, then I would be a big fan of it. But if it is only taking share, it's a short-term story, and we would like to stay out of it for many years,” Iyer said.

The strategy, according to Iyer, delivered the best-ever year for Mercedes India in terms of revenue even as total sales declined.

New models lined up

BMW now gets about half of its sales from first-time buyers who do not own any luxury vehicle. The company plans to launch 25 models in 2026, with a strong focus on entry-level luxury vehicles.

Mercedes also plans to launch 12 new products during the year, spanning both electric vehicles and internal combustion engine vehicles.

The battle for the crown in India’s luxury car market will only get intense.

“We are actually playing the role of expanding the pie of the luxury market, because somebody has to play the role,” Hardeep Singh Brar, chief executive at BMW India, said.

Both Mercedes and BMW are bullish about the prospects of growth in India in 2026 on the back of an expanding economy, lower interest rates and growing affluence.

Iyer expects growth in 2026, following a decline in sales the previous year. “If I look at the number of people inquiring for a luxury car, it's only going up year on year. So aspiration is there,” Iyer said.

“When there is uncertainty, there is, maybe, a postponement of demand. But if the uncertainty goes away geopolitically, FTAs (free-trade agreements) come in, the market is buoyant, capital markets are strong, you will find absolutely strong animal sentiment coming back even stronger.”