In Q1, the luxury carmaker’s EV portfolio, including the EQS sedan, EQS SUV, and the G580 electric, led the charge. All of these sit in the top-end bracket, with prices starting at ₹65 lakh.New Delhi: Mercedes-Benz India has posted a strong performance in the first quarter of FY26, fueled by a 157 per cent growth in electric vehicle (EV) sales—entirely driven by top-end models priced above ₹65 lakh. As the company ups its ante on ‘premiumisation’, its high-end EVs and premium internal combustion engine (ICE) vehicles are driving the volume while there is a significant degrowth in the entry-level segment. “We don’t have an entry-level EV in our portfolio, and we’re not looking to de-content cars like the GLA just to push price points,” said Santosh Iyer, Managing Director & CEO, Mercedes-Benz India. “The growth is purely top-end—both EV and combustion.”
During the April-June period, the company retailed 4,238 vehicles, registering a growth of 10 per cent over the corresponding period of the previous fiscal.
EV growth and product strategy
In Q1, the luxury carmaker’s EV portfolio, including the EQS sedan, EQS SUV, and the G580 electric, led the charge. All of these sit in the top-end bracket, with prices starting at ₹65 lakh. “We’ve seen a 157 per cent growth in EVs, and that’s primarily because our entire EV portfolio is top-end. There’s no entry-level electric vehicle in our lineup,” Iyer noted.The company continues to follow a “customer-led” strategy for EV adoption. While EV penetration in the brand’s sales was around 3–4 per cent last year, it now stands at 8 per cent. As a strategy, the company is not chasing numerical targets but is instead focused on offering EV options across the premium spectrum. “It’s about giving the customer a choice and letting them decide the pace of transformation,” Iyer said.
Luxury market flat, German trio stable
According to Iyer, the overall luxury car market in India grew by only 1–2 per cent in H1 of the calendar year, with the German trio (Mercedes-Benz, BMW and Audi) posting largely flat results. He attributes this to a strong base effect from last year’s H2, which accounted for over 50 per cent of total annual volumes.
(Source: Industry Data)“If you look at the first half of the year, the luxury market is flat. The full-year outlook is still cautiously optimistic, with flat to low single-digit growth,” Iyer said.
Tier-2, Tier-3 markets in focus
The carmaker is also focusing on Tier-2 and Tier-3 cities—not necessarily to drive volumes, but to improve service accessibility. It plans to open 19 new outlets this year, with recent launches in Agra and Jammu and upcoming ones in Patna, Kanpur, and Varanasi.
“In most cities, we’re starting with service centres because customers hate traveling to Tier-1 cities just to get their vehicles serviced. It’s a customer-centric move, not just a retail expansion,” Iyer emphasised.
Premium products and price hikes
Mercedes-Benz India has already implemented two price hikes this year—in January and July—with a third possible in September. Despite this, thanks to a timely RBI interest rate cut, the impact on customer EMIs has been mitigated.
“Even though prices went up, our captive financial services arm—which finances over 50 per cent of our cars—was able to pass on the benefit of the rate cut. So EMIs for customers remained unchanged,” Iyer said, adding that price hikes haven’t dampened demand in the premium segments.
In fact, most new launches have been at the top-end. The GLS, Maybach variants, AMG models, and the E-Class continue to be strong drivers in the core and top segments. “There are no new launches planned in the entry or core segments. Most of our launches this year—around eight—are in the top-end segment,” Iyer said.
Supply chain stable, no rare-earth disruption
Speaking on the rare earth magnet crunch that the auto industry is currently grappling with due to the export restrictions imposed by China–which produces 90 per cent of the world’s rare earth magnets– Iyer said the company’s supply chain is fairly insulated from the disruption as procurement operations are Germany-based.
“Our supply chain is managed out of Stuttgart and has been robust. We have no issues with sourcing or production. Waiting periods exist for some models like the EQS SUV or Maybach G580, but that’s due to demand—not supply constraints,” Iyer clarified.
The company also has no plans to localise or develop entry-level EVs for the Indian market. “All localisation efforts will remain in the top-end segment. Entry-level localisation is not in the pipeline,” Iyer confirmed. Currently, Mercedes-Benz India localises several models in the top-end EV range.
Clearly, Mercedes-Benz India is steering its India strategy towards sustainable profitability over sheer volume, banking on top-end electrification, customer experience in emerging cities, and premium-only positioning. As it puts the entry-level models on the backburner, and with EV penetration slowly climbing, the brand appears focused on quality over quantity in a market where luxury still accounts for just 1.1 per cent of total car sales.
