Mercedes-Benz India Signals Further Price Hike as Currency Pressure Mounts

Mercedes-Benz India may raise vehicle prices again as currency volatility increases costs, even as demand for luxury cars remains strong, Managing Director and Chief Executive Officer Santosh Iyer said.

The luxury carmaker has already increased prices twice in 2026. It had delayed another revision after the exchange rate briefly improved, but renewed currency weakness has brought a fresh increase back under consideration.

“We will further increase prices. We were waiting because we saw a glimmer of hope. The exchange rate came down to 106-107 rupees (per euro), and now it is back to 109,” Iyer told Autocar Professional.

He said the operating environment remained highly volatile and would have to be managed on a monthly and quarterly basis. “Further price increases may have a challenge. It is a highly volatile setup, and we need to steer it month by month, quarter by quarter,” he said.

Mercedes-Benz has not disclosed the size or timing of the proposed price increase.

The comments come after the company reported its highest-ever sales for the first half of 2026. Its retail sales increased 9% year on year to 9,768 units during January-June. Q2 sales rose 10% to a record 4,637 units.

Iyer said the company entered the second half with a strong order book and positive customer sentiment. However, currency pressure, further price increases and supply constraints could limit growth.

Mercedes-Benz continues to expect single-digit sales growth for the full year despite its strong first-half performance. “We still want to maintain growth, but not be euphoric. Cautiously optimistic is better,” Iyer said.

First-Time Luxury Buyers May Postpone Purchases

Higher prices are having a greater impact on customers entering the luxury-car market for the first time, according to Iyer.

While established customers may be better placed to absorb price increases, buyers with a fixed budget could delay their purchase when prices move beyond their planned range. “Many of the first-time buyers to luxury have a tendency to postpone purchases because they planned a certain price point and now it is going up,” he said.

Mercedes-Benz is seeking to reduce the impact through financing programmes that offer lower monthly instalments and longer repayment periods.

The company has seen an increase in the proportion of customers using finance. The average loan tenure has also risen from around 46 months to more than 50 months.

“We have seen increased financing percentages for customers opting for finance through programmes like Agility with reduced EMIs. We have seen an increase in loan tenure as well,” Iyer said.

He added that a higher new-car price could also support the vehicle’s resale value after three years. 

Luxury Growth Trails Wider Car Market

Mercedes-Benz expects India’s luxury-car market to have grown by around 10% during the first half of 2026. Iyer estimated total industry sales at about 26,000 units during the period.

However, luxury-car growth has trailed the wider passenger-vehicle market. Iyer attributed part of the difference to pricing.

Mercedes-Benz has raised prices twice, while mass-market vehicle prices remain below their levels before the GST reduction, he said.

He added that the GST-led fall in vehicle prices had shown that Indian customers remained highly value-conscious. Lower prices had released pent-up demand across the broader automotive market.

“India is a price-sensitive, value-conscious market. There was an average 6-8% decrease in prices, and that momentum continues,” Iyer said.

The luxury market is likely to retain its growth momentum in the second half, helped by new launches. But another Mercedes-Benz price increase and restricted availability of models could weigh on volumes.

“The prognosis still remains growth, but we don’t want to give a double-digit growth projection. We will remain at single-digit growth for the second half of the year,” Iyer said.