Mercedes-Benz India Expects Single-Digit Growth in Luxury PV Sales in FY27

Mercedes-Benz India expects the luxury passenger vehicle market in India to grow in single digits in FY27, as geopolitical conflicts, forex volatility, and price hikes are expected to weigh on consumer sentiment.

Santosh Iyer, Managing Director and CEO, said the outlook reflects a calibrated approach amid a complex global environment. “We maintain that the total market will grow in single digits. But exchange rate pressures, price hikes and geopolitical factors are weighing on sentiment,” he said.

On Wednesday, BMW Group India President & CEO Hardeep Singh Brar, said the impact of the West Asia conflict is already visible in recent sales trends. While overall vehicle retail sales in India grew in double digits during the January-March quarter, the luxury segment expanded at a much slower pace. 

“The total market has grown by 18% in the automotive market in quarter one. But the luxury segment has only grown by about 2%,” Brar said. 

A large share of luxury buyers are business owners and entrepreneurs whose incomes are closely tied to trade, exports and financial markets, making them more sensitive to geopolitical disruptions.

Despite the evolving geopolitical situation, the BMW Group India expects strong double-digit growth in luxury car sales in 2026.

Apart from geopolitical tensions, Iyer pointed to the continued depreciation of the Indian rupee against the euro as a key challenge, noting that it directly increases costs for European automakers.

In April, Mercedes-Benz India implemented a price increase of around 2% across its portfolio to offset the impact of forex volatility and rising input costs. The company indicated that it might consider further price revisions through the year if currency pressures persist.

Iyer added that the luxury PV industry is now operating in a “new normal”, shaped by recurring disruptions from semiconductor shortages and tariffs in recent years to ongoing geopolitical conflicts. 

Despite these headwinds, Iyer remains confident about the structural growth story. “If you look at India’s fundamentals, such GST collections, infrastructure growth and a young population, the underlying demand remains strong,” he said. “But growth will be calibrated. We are not chasing growth at any cost.”

The company added that some customers have deferred purchases due to uncertainty and pricing changes in March, but there were no signs of order cancellations, indicating sustained intent to buy.

Strong FY26 Performance

Mercedes-Benz India reported its best-ever fiscal performance in FY26, retailing 19,363 vehicles, up 2% from 18,928 units in the previous year. Growth was led by strong demand for top-end luxury vehicles and electric models. The top-end luxury segment grew 16% during the year and accounted for 27% of total sales.

In contrast, the entry luxury segment declined 18%, reflecting the company’s strategic shift towards value-led growth rather than price-driven volumes.

Compared to Mercedes-Benz India, BMW India Pvt Ltd emerged as the fastest-growing player among the top brands, registering a 28% jump in sales to 18,284 units in FY26, according to data shared by JATO Dynamics India. Jaguar Land Rover India Ltd also posted healthy growth of 18% to 6,106 units, supported by strong demand for premium SUVs. In contrast, Audi India saw a 26% decline in sales to 4,416 units, while Volvo Car India reported a marginal 4.6% drop to 1,709 units.

Product Pipeline and Network Expansion

Mercedes-Benz India has lined up an aggressive product pipeline for 2026, with a focus on electric and performance vehicles.

The company is set to launch the CLA BEV, marking the introduction of its next-generation software-defined electric vehicles in India. It also plans to introduce new AMG models, including the AMG A45 S Aero Track Edition and AMG GLE 53 Coupe Performance Edition.

“Our product strategy will continue to focus on superior product content and customer aspirations, reinforcing our approach of value-led growth,” the company said.

On the retail front, the automaker is expanding its network under its ‘Go to Customer’ strategy. It plans to open more than 20 new luxury outlets across key and emerging markets, supported by an investment of over ₹450 crore by franchise partners.

The expansion will include entry into new cities such as Visakhapatnam and Varanasi, while strengthening presence in existing markets like Mumbai, Delhi NCR, Pune and Bengaluru.