Luxury car brand Mercedes-Benz India says demand for its vehicles has significantly exceeded its expectations this year, with supply constraints preventing the luxury carmaker from fully capitalising on the market opportunity.
The company, which posted an 8% increase in retail sales during January-September 2026 as compared to the corresponding period last year, said it could have delivered double-digit growth had it been able to secure adequate supplies of some of its key models.
Mercedes-Benz India sold 15,190 vehicles during the first nine months of 2026, its strongest-ever January-September performance. However, managing director and CEO Santosh Iyer said the company had underestimated demand for some products, particularly its electric vehicles.
“Honestly, we read a bit wrong because if I add again the CLA kind of a demand and when I add the EQS SUV, which is also in short supply, we will be much more than it. We had an opportunity to grow double digit as well from the market perspective,” Iyer said.
EV Portfolio Bottlenecks
The supply constraints have been particularly visible in Mercedes-Benz's EV portfolio. The company’s BEV sales grew 16% in January-September, but Iyer said this does not reflect the underlying demand for its electric models.
“If I look at the EV portfolio also Jan-September, we have grown by 16% compared to last year, but it still doesn't reflect the true potential that we can see that we could have done if you had the right products,” he said. The New CLA BEV has emerged as a major demand driver, with Mercedes-Benz receiving more than 1,000 confirmed orders. Deliveries for some customers have already been pushed out to March 2027, reflecting the mismatch between demand and available supply, according to Iyer.
The company said the BEV portfolio accounted for around 9-10% of its sales in the first nine months, but Iyer expects this to rise sharply once supply improves and new models arrive. “It’s a matter of time. I would highly look forward to the first quarter of next year where we have all these supplies coming in, you know, the new CLA, the GLC, full supply, EQS being there. I won't be surprised if we really cross, you know, 20-25% on EV,” he said.
Iyer added that the EV opportunity is increasingly supply-driven and not just demand driven from the portfolio perspective. The company is currently facing different supply-related issues across its EV portfolio. While demand for the CLA BEV has risen sharply in Europe, limiting the availability of cars for India, the EQS SUV has faced a forecasting issue after demand in India shifted more strongly towards EVs than Mercedes-Benz had anticipated.
“For us the biggest challenge is because of forecasting and not because of supply chain because we forecasted not so strong,” Iyer said. “There was a significant shift towards more EVs and demand for the EQS, which we were not able to supply. Right now we are running dry completely actually.”
November Relief for EQS
Mercedes-Benz expects supplies of the EQS SUV to improve through November and December, while the arrival of the locally assembled GLC BEV and increased CLA supplies should further strengthen its electric portfolio. He added that demand remains resilient despite multiple price increases during the year.
Mercedes-Benz recorded its best-ever quarter in Q3 2026, retailing 5,422 vehicles, up 6% year on year and 17% sequentially. “In spite of three price increases during the year has been able to hold on. We have EMI holidays, low interest rate campaigns. So we are still able to mitigate even though the price has gone up," he said.
However, supply remains a constraint heading into the festive season. Iyer said shipping disruptions have added roughly two weeks to delivery timelines. “The inflation is not just the currency but also the cost inflation because of what is happening and all of this we can't pass on to the market because if we do that then definitely we may have an impact on demand again,” he said.
According to Iyer, festive-season demand has started on a strong note, although supply will continue to remain a challenge. “The supply continues to be a challenge. The situation was ultimately a good problem to have as long as the demand is strong," he adds.