Mercedes-Benz India Sees Flat-to-Single-Digit Growth in 2025: MD Iyer

Mercedes-Benz India sees India's luxury car sales cross 50,000 milestone for second year in a row in 2025, but expects sales growth to be muted due to ongoing macroeconomic and geopolitical uncertainties. 

“If you look at the full year, I am still feeling that it will be a flat-ish or a single-digit growth. It will not be very high as such,” said Santosh Iyer, Managing Director & CEO, Mercedes-Benz India.

The first half (H1) of the calendar year (January to June 2025) has seen moderate demand, largely mirroring the broader automotive industry’s performance. According to Iyer, growth during this period was largely flat, in line with the 1.5% to 2% industry-wide growth trend. 

“Jan to June will be flat. Industry is also flat… If you take the core German players, it will be flat-ish. The total industry is almost flat-ish, I would say.” 

In H2, Iyer expects the high base of last year, price hikes, and geopolitical uncertainty to weigh on growth, but remains optimistic due to festive and wedding season demand, as well as potential trade agreements. He expects luxury car sales to be flat or grow in single digits in H2.

In 2024, India's luxury car market crossed a significant milestone, surpassing 50,000 units for the first time. However, growth slowed to single digits due to a sluggish economy and reduced government spending during the election year. 

The luxury car market grew by 6% in 2024, recording sales of approximately 51,500 units. The market grew by 9% in H1 of 2024 but slowed to 2-3% in H2 due to economic uncertainty and shifting consumer sentiment. This follows three consecutive years of double-digit growth.

Pricing Pressure

While sentiment remains broadly positive in 2025, Iyer acknowledged that rising vehicle prices, driven by currency fluctuations and import costs, are creating a longer decision-making cycle for customers.

“There is a bit of delay in decision-making… But we still see a lot of consumers wanting to buy a Mercedes-Benz,” he said.

The Euro's sustained strength–hovering near ₹100-101–has added cost pressures, leading the brand to announce a series of price increases, including a 3% hike in June, with another likely in September. However, the company continues to mitigate this impact through EMI support schemes.

Iyer noted that while geopolitical instability remains a major source of unpredictability for supply chains and pricing, domestic economic indicators offer reasons for cautious optimism.

“If India successfully concludes the FTAs, there can be a very strong positive momentum… Capital markets and real estate are showing growth, which gives us confidence for the second half,” he said.

Despite global headwinds, Mercedes-Benz India has recorded its best-ever April-June sales performance, retailing 4,238 units, representing a 10% year-on-year growth. The growth was driven by strong demand in the top-end luxury segment, including the EQS Maybach, G 580 with EQ Technology, Mercedes-Maybach Night Series, and AMG performance range. The BEV portfolio saw exceptional traction, growing by 157%, with BEVs accounting for 8% of total sales.

“April to June has been a good one… Last year also had similar low seasonality, and this year we still see more people buying cars. It’s a good indication,” Iyer said.

The company expects this positive sales momentum to benefit from India's festive season in H2, which includes Navratri, Diwali, and the wedding season, traditionally strong demand periods for luxury cars. “The second half has positive sentiments because of the festivities… That is a big enabler.”

Used Car Market

Mercedes-Benz is also seeing strong growth in its used car business, which now contributes around 20% of total sales. Rising new car prices have caused residual values of used cars to rise by 15–20%, making them a more attractive proposition for first-time luxury buyers.

“Used car prices have gone up significantly… As new car pricing goes up, used cars also become more attractive,” Iyer noted.

However, availability remains a challenge, and the company is exploring digital platforms and partnerships to streamline sourcing and improve access for customers.