What we will not do is discount deeply, neither will we compromise on product substance, says Managing Director and Chief Executive Officer (MD&CEO) Santosh Iyer.
Key Points
- Mercedes-Benz India achieved a 7 per cent year-on-year sales growth in Q1 2026, selling 5,131 vehicles, and recorded its best-ever financial year with 19,363 units sold in FY26.
- The growth was primarily driven by the top-end luxury segment (Maybach, AMG, S-Class, EQS), which saw a 25 per cent increase in Q1 and contributed 27 per cent to total sales.
- Electric vehicles, particularly the EQS SUV, accounted for 20 per cent of all top-end vehicles sold, highlighting strong EV adoption in the luxury segment.
- Despite challenges like geopolitical tensions, exchange-rate deterioration, and price increases, the company prioritised profitability and brand equity over volume, refusing to compromise on product substance or offer deep discounts.
- Currency weakness and cost inflation remain concerns, with the rupee's depreciation against the euro potentially leading to further price increases in Q3.
Mercedes-Benz India posted sequential growth in the January-March quarter (Q1) of 2026, defying the disruption caused by the West Asia crisis, volatile financial markets, and rising input costs, as demand for its top-end luxury and electric vehicle (EV) models offset pressure in the entry-level segment.
The German luxury carmaker sold 5,131 vehicles in Q1, up 7 per cent year-on-year (Y-o-Y) from 4,775 units a year earlier, and also 5 per cent higher quarter-on-quarter (Q-o-Q) than the roughly 4,800 units sold in the preceding October-December quarter, according to company data.
The Q1 performance capped Mercedes-Benz India’s best ever financial year, with 2025-26 (FY26) sales rising to 19,363 units.
Resilience in Luxury and EV Segments
“We are the only luxury brand to have registered back-to-back quarter growth of plus 5 per cent,” Managing Director and Chief Executive Officer (MD&CEO) Santosh Iyer said, underlining that the company had expanded volumes despite geopolitical tensions, exchange-rate deterioration, and two rounds of price increases.
The resilience came largely from Mercedes-Benz’s premium mix. Its top-end luxury segment -- which includes Maybach, AMG, S-Class, and EQS models -- rose 25 per cent in Q1 and 16 per cent for FY26, contributing 27 per cent to total sales.
Battery EVs accounted for 20 per cent of all top-end vehicles sold, with the EQS SUV emerging as the company’s highest-selling luxury EV in India.
Iyer said customers continued to buy because of strong product appeal rather than macro sentiment.
“Product is what excites customers,” he said, citing strong advance bookings for the newly launched V-Class and the soon-to-be-launched electric CLA.
Iyer said order intake remained robust in the quarter, though some deliveries were deferred because of shipping and launch timelines.
Strategy: Value Over Volume
The company’s performance also reflects a deliberate strategic choice: prioritising profitability and brand equity over chasing headline volumes in a discount-heavy market.
While Mercedes-Benz’s entry luxury segment declined 18 per cent in FY26 amid aggressive pricing by rivals, the company has refused to dilute specifications or deepen discounts to protect volumes.
Iyer said: “We cannot achieve that by decontenting products or by deep discounting, because it affects the residual value of the car.
"What we will not do is discount deeply, neither will we compromise on product substance.”
This “value over volume” positioning comes at a time when rivals are expanding aggressively in lower-price luxury categories to widen their customer funnel.
Mercedes-Benz is instead betting that long-term brand aspiration and stronger retention in core and top-end segments will protect margins and strengthen pricing power.
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Pricing and Future Outlook
Mercedes-Benz’s entry luxury models are priced between ₹45 lakh and ₹60 lakh, core luxury vehicles are priced in the range of ₹65 lakh to ₹1.2 crore, and the top-end vehicles are priced ₹1.2 crore and above.
However, currency weakness and cost inflation remain overhangs on the sales outlook.
Since January, the rupee has depreciated by roughly 2.5 per cent against the euro, increasing the landed cost of euro-denominated imports such as CKD kits, CBUs, and components.
Mercedes-Benz raised prices by 2 per cent in January and again in April, and Iyer indicated another increase may come in Q3.
Full throttle
- Company retailed 5,131 units in Q1 2026, marking 7% Y-o-Y growth and a 5% Q-o-Q increase
- Also, recorded its best ever annual sales of 19,363 units in FY26, up from 18,928 in FY25
- The top-end luxury segment accounted for 27% of the company’s total FY26 sales
- BEVs made up 20% of all top-end segment sales in FY26
Feature Presentation: Rajesh Alva/Rediff
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