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

Pune: German automaker Mercedes-Benz will stick to top-end luxury cars and not chase volume in India even as its leadership in the domestic market faces intense challenges.

Mercedes sales in India fell 3% to 19,007 in 2025, remaining the biggest seller of luxury cars priced above. ₹50 lakhs. German peer BMW remained at the top for a decade, widening the gap to 18,001 units with 14% growth during the year.

Mercedes will still not join the race to sell more entry-level luxury cars to match volumes, Santosh Iyer, managing director and CEO of Mercedes-Benz India, said in an interview.

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

“If you go back exactly 14 years, we see a significant number of low-end cars coming in and lower premium cars coming in. We have stayed true to our strategy,” Iyer said, adding that the company was in the entry-level segment but aggressive discounting by competitors deterred it from price wars.

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

different from BMW

The strategy differs from BMW’s. The company previously told Mint it was trying to expand the luxury market by bringing in more first-time buyers who previously owned cars priced between 2000 and 2000. ₹15 lakhs and ₹25 lakhs.

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

“About 60% of our sales come from luxury residents who own more than one luxury vehicle. We have also seen most first-time buyers jumping straight into the basic luxury segment rather than entry-level luxury,” Iyer said.

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Gaining market share through aggressive pricing will not expand the market, he said, as this ultimately requires offering valuable products and maintaining brand equity.

“It’s not healthy in the long run because this playbook, if it was growing the market, then I would be a big fan of it. But if it’s just to get share, it’s a short-term story and we want to stay out of it for many years,” Iyer said.

According to Iyer, the strategy has delivered Mercedes India its best-ever year in terms of revenue even as overall sales declined.

New models lined up

BMW now gets about half of its sales from first-time buyers who don’t own any luxury vehicles. 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, covering both electric and internal combustion engine vehicles.

The fight for the crown in India’s luxury car market will get even more intense.

“We are actually playing the role of expanding the luxury market pie because someone has to play that role,” said Hardeep Singh Brar, CEO of BMW India.

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Both Mercedes and BMW are optimistic about growth prospects in India in 2026, thanks to an expanding economy, low interest rates and rising prosperity.

Iyer expects growth in 2026 after a decline in sales the previous year. “If I look at the number of people who want a luxury car, I see that the number is increasing every year. So there is a desire,” Iyer said.

“When there is uncertainty, maybe there may be a delay in demand. But if geopolitical uncertainty disappears, FTAs (free trade agreements) come into play, the market revives, capital markets are strong, you will definitely see the strong animal sentiment getting stronger.”