**Mercedes-Benz Focuses on Luxury Segment Amidst Market Challenges**
German automaker Mercedes-Benz has reaffirmed its commitment to the high-end luxury car market in India, opting not to pursue volume sales despite facing increasing competition. In 2025, the company reported a 3% decline in sales, totaling 19,007 units, yet it remains the leading seller of luxury vehicles priced above ₹50 lakh. Meanwhile, rival BMW has narrowed the gap with a 14% increase in sales, reaching 18,001 units.
Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, emphasized in a recent interview that the company will not engage in the race for entry-level luxury cars to boost sales volumes. He noted that while Mercedes has a presence in the entry-level segment, aggressive discounting by competitors has deterred the brand from participating in price wars.
Iyer pointed out that the ongoing price competition has detrimental effects, including reduced residual values and brand dilution, which many brands in the Indian market have experienced. He highlighted that Mercedes’ strategy has remained consistent over the years, focusing on maintaining brand integrity rather than chasing short-term market share.
In contrast to BMW’s approach, which aims to attract first-time luxury car buyers from lower price segments, Mercedes derives approximately 60% of its sales from affluent customers who already own multiple luxury vehicles. Iyer mentioned that many new buyers are opting for core luxury models instead of entry-level options.
He expressed skepticism about the long-term viability of gaining market share through aggressive pricing, stating that it does not contribute to market expansion and could harm brand value. Iyer believes that a focus on delivering value products while preserving brand prestige is essential for sustainable growth.
Despite a decline in total sales, Mercedes-Benz India achieved its highest revenue year to date, demonstrating the effectiveness of its strategy. Looking ahead, the company plans to introduce 12 new models in 2026, including both electric and internal combustion engine vehicles, as the competition in India’s luxury car market intensifies.
**FAQ**
**Q: What is Mercedes-Benz’s strategy in the Indian luxury car market?**
A: Mercedes-Benz is focusing on high-end luxury vehicles and avoiding aggressive pricing strategies to maintain brand value, despite facing competition from rivals like BMW.
