“We Are Happy Rivals Are Bringing in First-Time Buyers; They Will Evolve Into Our Segments,” Says Santosh Iyer

In a market increasingly tilting towards aggressive entry-level plays, Mercedes-Benz India is choosing to stay above the fray.

Even as rivals expand the base of India’s luxury car market by targeting first-time buyers with aggressive pricing and accessible products, the German luxury carmaker sees this as a structural tailwind rather than a competitive threat.

Santosh Iyer is unequivocal. “We are quite happy if there is anybody trying to grow the entry segment by getting customers to enter into the luxury segment,” he said, underlining a strategy that is less about chasing volumes and more about capturing value over time.

The comment comes at a time when its German rival BMW is challenging Mercedes-Benz for the number 1 position in terms of volume, but the maker of the 3-pointed star is playing on desirability and luxury imagery.

Building the funnel, owning the upgrade

The underlying thought process is simple but deliberate. Let the market expand at the bottom, even if driven by competitors. The real opportunity, Mercedes-Benz believes, lies in the upgrade cycle. That is not an India strategy alone; that’s how the brand is evolving at a global stage.

As first-time luxury buyers mature, their aspirations, purchasing power, and expectations evolve, and that is where the brand expects to win.

“We are super confident that at some point in time, they will buy our core or top-end vehicles,” Iyer said.

This is a clear departure from the volume-led playbook being adopted by several competitors and instead reflects a lifecycle-led strategy anchored in long-term brand equity.

Financing as the equaliser

If price is not the lever, financing is.

Mercedes-Benz is leaning heavily on structured financial solutions to improve accessibility without diluting positioning. Lower EMIs, residual value guarantees, and strong support for pre-owned cars are being deployed to bring customers into the fold.

“The biggest tool for us is financing,” Iyer said, pointing to the company’s NBFC-backed ecosystem that enables even higher-end products to be within reach of first-time luxury buyers.

The approach allows the company to reframe affordability around ownership cost rather than acquisition price, a critical shift in a price-sensitive yet aspiration-driven market like India.

Crucially, this strategy comes with a firm refusal to engage in price wars.

Even in segments where competition is intensifying, Mercedes-Benz is maintaining its pricing discipline. The upcoming CLA EV, for instance, will be positioned around the ₹60 lakh mark, well above the sub-₹50 lakh plays emerging in the market.

“We are not going to compete on price,” Iyer reiterated, signalling a clear intent to protect brand equity and residual values.

The new luxury buyer

What also underpins this strategy is a shift in consumer behaviour. India’s luxury car market is no longer strictly linear, believes Mercedes-Benz. A growing cohort of buyers is entering directly into core and even top-end segments, bypassing the traditional entry route altogether.

“There is a large set of customers who are first-time buyers of luxury coming into core directly and even top-end,” Iyer explained.

This changing profile reduces the urgent necessity of playing aggressively at the entry level.

The backdrop to this strategy is a shifting competitive landscape. BMW Group India has recently edged past Mercedes-Benz in quarterly sales for the first time in over a decade on Vahan retail registrations, even as Mercedes-Benz continues to retain its lead for the full FY26.

The divergence underscores a widening strategic split in the luxury market, with rivals pushing harder on volumes and entry accessibility, while Mercedes-Benz doubles down on value, mix, and long-term customer lifecycle.

Growth, but not at any cost

Despite rising competitive intensity, Iyer remains clear that market share will not come at the expense of strategy.

He described market share pressure as “self-created,” reiterating that the company’s focus remains on sustainable growth, customer experience, and long-term desirability.

The message is clear. Mercedes-Benz is not looking to win the entry battle. It is positioning itself to win the upgrade game.

In a market where its closest rival is busy widening the funnel, Mercedes-Benz is preparing to own the most valuable part of it—desirability, revenue, and sustainability over volume market share.