Mercedes has had a record financial year. Do you think this growth is sustainable in the current environment?
Last year, our outlook was single-digit growth. This year as well, even before the current crisis [the conflict in West Asia], we had forecast a single-digit growth, and we stick by that.
There is growth momentum in the market. India is growing strongly and demand remains robust. At the same time, there are headwinds. When you balance both, we believe growth is still possible.
Last year, the government intervened with interest-rate and GST cuts. These are the positive enablers. Now the responsibility to grow is with the corporates.
Spending in sectors like real estate and capital markets saw a setback when tensions flared up in West Asia in March, but we did not see cancellations, only postponements. That demand was back in April.
We remain positive that the market can deliver at least single-digit growth. In the January–March quarter, the luxury industry declined by 8% compared to the previous quarter, while we grew by 5%. That gives us confidence that by doing the right things, steadily, we can maintain momentum.
You’ve already hiked prices twice this year and input costs are not easing. How do you see the impact of this, along with global uncertainties?
We have had to increase prices multiple times, even before the GST cut. The luxury market could not fully benefit the way the mass market did because mass market players passed on GST benefits and discounts. In our case, dependence on imports is still higher due to limited localisation. Hence, with a depreciating rupee and rising input and supply chain costs, these increases have to be passed on.
That is one of the reasons why, despite growing double-digit year on year, we are guiding single-digit growth. Otherwise, growth could have been higher.
The alternative is to chase market share through heavy discounting, which we do not believe in. We do not want to win market share at any price. We focus on innovation and new product introductions. We do not want to artificially drive demand by lowering prices, as that impacts residual value for customers.
We are conscious of growth, but not at the cost of the customer or the brand.
Many markets have taken learnings from India. Our retail model has been adopted globally. We also have strong Indian talent working across global roles
What will drive growth, even if it is in single digits?
We are launching 12 new products. The new product line-up can drive growth without disturbing the price structure. It allows us to grow in a pragmatic way.
We have a strong network strategy, adding over 20 outlets. We are introducing products across segments and powertrains, including EVs [electric vehicles], diesel and combustion engines.
We are also focusing on localisation. It is beyond 30% overall and varies by product depending on volumes.
1 April 2026
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Why hasn’t the luxury-car market grown beyond 1-2% penetration?
Prices of luxury cars have increased significantly more than mass-market cars over the past 8–10 years. The average selling prices for luxury cars have increased more due to rupee depreciation and higher input costs. That restricts growth.
In the past six months post-GST [cut], the overall market grew strongly about 16%, but the luxury segment did not grow at the same pace because luxury prices increased while mass market prices reduced.
Will free trade agreements or lower import duties help?
Not significantly. Import duties are not the biggest issue because we already localise most of our cars. Around 95% of the cars we sell in India are locally assembled, although we still import parts that attract duty. The bigger challenge is taxation. Around 60% tax applies to cars sold in India. That has a much larger impact on pricing.
What is your product strategy across powertrains like EVs, diesel and hybrids?
Last quarter, we saw a significant shift towards diesel, with more than 50% of our sales becoming diesel, largely driven by total cost of ownership. We also see equal opportunity for plug-in hybrids, hybrids and EVs. Customers will decide based on ownership cost, purchase price, running cost and residual value. If it fits their needs, they are willing to move away from traditional combustion engines.
We have all these technologies available. We will offer all options and let the market decide.
Sports utility vehicles (SUVs) are dominating the market. What is the future for sedans in the luxury segment?
SUVs account for about 55% of our sales. However, the largest-selling car in the entire luxury-car market is still the E-Class sedan, and it is not the cheapest car. It is a paradox. It is priced at over ₹1cr on-road and continues to lead the segment.
India’s volumes are still relatively small globally. How important is India in Mercedes’ global portfolio?
We should not look only at volumes. Average selling prices have increased significantly form about ₹60 lakh to more than ₹1cr. India is now among the top five Maybach markets globally. If you only look at volumes, we could have sold three times more but not make any money. We need sustainable growth. Many markets have taken learnings from India. For example, our retail model has been adopted globally. We also have strong Indian talent working across global roles.
How is the customer profile changing?
In April, we announced the new CLA [a sedan]. We got over 400 bookings in about 20 days. Around 60% of them are first-time luxury buyers and 40% are existing luxury-car customers.
Many buyers are under 35, from double-income households, buying their first Mercedes. We are seeing a clear shift in demographics, especially in metros. But still more that 80% of the cars are bought on finance. The share of salaried buyers has increased from around 8–9% to about 15%.
