Even as competition intensifies in India’s luxury car market, Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, has made it clear that the company is not chasing the top spot purely on volumes, but on customer value and brand desirability.

“For us, the number 1 position matters not for volumes, in view of us being number one in terms of customer value. If you see years back, we would never have shifted to a direct-to-consumer model if we were so fixated about volumes," he told Autocar Professional.

He added that while other premium brands may already be leading the market, technically speaking it is a factor of the price points that one can operate at. "Desirability is not a volume-only approach; it's a combination of the mix that you do to get desirability of the brand. The long-term customer trust in the brand is created by doing the right thing, so for us number one is important, but it is more important to be number one on the customer experience side and what they feel for the brand than just absolute volumes," he adds.

This comes at a time when rival BMW Group India has briefly overtaken Mercedes-Benz in quarterly sales. According to VAHAN registration data, BMW Group India recorded 4,944 units in the January–March quarter of CY26, compared with a combined 4,862 units for Mercedes-Benz India and Mercedes-Benz AG, giving BMW a narrow lead of about 82 units.

However, Mercedes-Benz retained its position as the top luxury carmaker for the full FY26. Mercedes-Benz India reported its highest-ever annual sales in FY26, with retail volumes reaching 19,363 units, driven by strong demand for higher-priced vehicles even as entry-level models saw a decline.

Iyer said that market share pressures are often self-imposed and can distract from long-term brand building. “The word market share is a self-created pressure because there is nobody expecting us to have any certain position in the market. Our customers demand the right value, products, and better experience, better residual values, so if you don't take care of the customer and cave in to self-created pressure, we will not do the right things for the brand," he said.

He adds that the company is quite clear on its strategy. "We are clear on what we will do, but even more clear on what we will not do. This clearly doesn't mean we don't want to sell more cars or we are not looking at volume growth; we are still growing and are going quite well. We want to keep the customer interest at the center of what we do. If I get into the self-created pressure, then we will not do justice to the customer," he said.

A key part of this strategy has been the company’s shift to a direct-to-consumer (D2C) retail model under its ‘Retail of the Future’ initiative. According to Iyer, this approach prioritises transparency and long-term value over short-term volume gains.

“For us, discounting is not wrong. I think the customer gets great value, but then it leads to brand erosion and long-term residual value. This is one of the fundamental reasons we shifted to the retail of the future four years back, and which is now being implemented in other markets like South Korea and Germany. We ensure transparent pricing and the right desirability led by a revenue-first approach," he said.

To improve that, Iyer adds, Mercedes-Benz India is increasing the number of service package offerings and financial products. "But more importantly, the retail of the future model that we run is a D2C model in which stocks are transparent, and you can go and check the availability, and that helps us gain customer trust. So, revenue growth will be a natural outcome because we are here to do business, and this is important for a sustainable business," he said.

Looking ahead, Iyer expects the overall luxury car market to grow in single digits, amid macroeconomic and geopolitical uncertainties. “The total market should see single-digit growth, but there are challenges around increasing prices and geopolitical issues; but this is also a factor of a continual new world order. But on the other side, India is growing, whether you look at GST collections or infrastructure growth. I think there is still a very strong India story," he said.