Won't Engage in Price War: Mercedes' Santosh on Entry-level Degrowth 

Despite a sharp 23% decline in the entry-level luxury car segment, Mercedes-Benz India has made it clear that it will not chase volumes through aggressive discounting.  The company sold a total of 19,007 cars in 2025, representing a decline of 3% compared to the year before.

The luxury carmaker said it remains focused on protecting brand value and prioritising profitable growth over a price-led market share battle, even as overall volumes saw a marginal dip last year. 

"We would rather prefer value or volume game. We won't play the price war. We saw 23% degrowth in the entry segment and we did  19,007 overall which is a degrowth of 2% in terms of volumes but revenue wise, this was our best-ever year," Santosh Iyer, Managing Director & CEO, Mercedes-Benz India said. 

Entry Luxury, Core and Top-End contributed 13%, 62% and 25% respectively to the overall CY 2025 sales volume. Entry-level segment decline is in line with the brand’s strategy of not compromising product substance or participating in price competition in the market, the company said. 

"The crux of the matter is that the market is not being grown by a competitor. The market is same. Total market has hardly gone up by 2%. The entry-level segment is 25% of the industry. If you take Mercedes Benz out and you take rest of the industry, the entry becomes 30%. If you take the closest competitor, their entry segment is at 40% which has cars below Rs 50 lakh," he explains. 

Its closest competitor BMW Group India sold 18,001 cars in 2025, achieving high growth of 14% YoY, achieving a top end vehicle growth of 11%. "Who minds getting to a number one position, but we want it to be an organic growth to number one and not inorganic.  Now the gap is about 1,000 units. Last year, it was close to 2,500," Hardeep Singh Brar, President and CEO, BMW Group India in a recent interview told Autocar Professional.

Iyer is unfazed by the market share loss. "This is not the first time we have seen this. In 2012, we saw  exactly this (heavy discounting) happening among two brands. We even became number three at that point of time but we never flinched as this is going to erode consumer value," he adds. 

He further added that while the revenue contribution is growing, the bottom line is under pressure. "Average selling price per car has gone up to Rs 1 crore for me. My top line is growing but bottom line under pressure. Ideally, that should also be growing but because of the exchange rate. I am able to easily withstand and still do a profitable business because of the same," he said.

Mercedes-Benz India said the focus will be on growing Top-End Vehicles (TEV) portfolio comprising the exclusive S-Class, Mercedes-Maybach and AMG that saw 11% yoy growth, and 25% sales penetration. It plans to launch 12 new cars in 2026, including a GLS Maybach, a 7-seater version of EQS SUV, a refreshed 5-seater acelebration edition and will also be localising the GLS Maybach in India. "India will be the first market outside of US to do it, the price point from Rs 3.17 crores currently comes down to Rs 2.75 crores' Iyer said.