India's two largest luxury carmakers, Mercedes Benz and BMW, are seeing electric vehicles (EVs) account for a sharply rising share of their sales, but they remain divided on the role of hybrid technology in the market.
While market leader Mercedes-Benz argues affluent buyers still seek the range assurance offered by hybrids, BMW believes the rapid adoption of EVs in the luxury segment makes hybrids an unnecessary transitional technology.
The contrasting strategies highlight how the two German rivals are pursuing different routes to defend market share and profitability as their battle for the top spot in India's luxury car market intensifies, with Mercedes occupying the top spot in India’s luxury car market for about a decade
Electric luxury car market leader BMW saw its EV sales surge 78% to 2,359 units, according to sales numbers released by the companies earlier this week. While Mercedes did not reveal its total electric sales between January and June, the share of EVs in total sales rose to 14% between April and June, up from around 8% at the end of 2025, following the launch of a new EV in April.
Mercedes' total sales between January and June stood at 9,768 units, with 9% year-on-year growth boosted by a jump in EV sales. BMW's total sales in the same period were 9,075, with 17% year on year growth.
BMW does not favour hybrids
“I don't think so (there is a need for hybrid vehicles to grow). The reason for that is you should have an engine and also a battery in the car. Your cost definitely goes up much more and there is a complexity of that. So, unless the OEM, maybe sells it at a loss and brings it at a competitive price, because with the power trains in the car, it's not possible to keep that prices in check,” Hardeep Singh Brar, president at BMW India, told Mint in an interview.
BMW has seen the share of EVs in its total sales rise to 26% in the first half of 2026, as against 21% for 2025.
“People are using it as a transitioning technology till they have the electric vehicle,” Brar added, noting that EV battery prices coming down is helping total cost of ownership which in turn is helping it sell more EVs.
Mercedes, on the other hand, believes there is a case for hybrid vehicles to help convert customers of internal combustion engine vehicles to EVs
“If you look at the top-end segment, more than 20% of the cars we sell in the top-end are electric. So clearly, there is an acceptance of EVs in the top end. But that's one way to look at it,” Santosh Iyer, managing director and chief executive at Mercedes India, told Mint.
“But the other way is there are still 80% of customers who are preferring to buy a normal combustion engine car, which is a gasoline or a diesel powertrain. And from a bridging perspective, the core reason for their purchases is the anxiety related to range, availability of charging infrastructure at times, and also the leap of need to shift into electric. So hybrid to these customers forms a perfect bridge,” Iyer added.
A bigger battle brewing
Mercedes introduced India’s first plug-in hybrid in June to begin its bid in the hybrid vehicle space, even as BMW remains mute about any plans to introduce a hybrid powertrain in the Indian market.
Subhabrata Sengupta, a partner at Avalon Consulting, said it makes sense to have a hybrid offering in the luxury space, but its growth will depend on which use cases a company primarily caters to.
"If people are looking at luxury tourers, a hybrid is a good option. If running is urban, EV makes more sense than a hybrid. If it is mixed use, a hybrid makes sense," he said.
The divide in strategies mirrors the different approaches both companies have followed in the Indian market. Mercedes, which currently occupies the No. 1 position, is focusing on ultra-premium cars to boost profits, although sales have recently been hurt. BMW, on the other hand, is snapping at Mercedes’s heels with aggressive pricing.
Their divergent strategies are reflected in a key growth segment for both the carmakers, where the battle’s heating up—the electric vehicle market, where BMW’s least expensive vehicle costs about ₹50 lakh and Mercedes’s about ₹55 lakh.
The divide over hybrids comes as the country prepares for a series of mass-market launches of new hybrid vehicles. Within the mass market, a similar divide exists between homegrown OEMs Tata Motors PV and Mahindra and Mahindra and Japanese carmakers Toyota and Maruti Suzuki, who believe hybrids should be promoted in the Indian market.
Experts suggest that traction for hybrid vehicles will increase in the coming years as more models come from new players in the market.
“We see strong hybrids scaling from ~2.3% of PVs today to 7–8% by 2030, driven by a near-doubling of the model catalogue by FY28, policy notwithstanding. The 40% GST (goods and services tax) wall and improving BEV (battery EV) economics are real risks, so our conviction is deliberately anchored to the back half of the decade,” analysts at Bernstein said in a note on 15 June.