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With high forex rates, German luxury carmaker Mercedes-Benz, which has the highest market share in the Indian luxury car market, has announced two price increases on its vehicle offerings. A price hike of upto 3 per cent will be implemented starting from 1 June, and an additional 1.5 per cent hike starting from 1 September.
Earlier, the Pune-based carmaker implemented a price hike of upto 3 per cent in January. The price corrections will range from ₹90,000 for a C-Class to ₹12.2 lakh for the Mercedes-Maybach S 680.
“The forex has witnessed a 10 per cent increase over the last four months. We were not rushing to increase prices. When we started the year, there was a price increase on January 1, and then we were closely observing the market, but the exchange rate is beyond our control. This has caused this measure to be implemented. We have done a lot of localisation and we continue to do so, which has helped us to mitigate some of the risks,” Santosh Iyer, Managing Director & CEO, Mercedes-Benz India, told businessline.
The company, however, believes that the impact on consumers will be minimal with the interest rate decreasing. “The borrowing rate for NBFCs has come down because of the higher liquidity in the market. RBI announced a lower interest rate in the last quarter, which implies our cost of funds has come down, and we will be able to pass on the benefit to the market. The company also offers maintenance packages, service packages as part of EMI. It is all in one EMI, and a lower interest rate helps to keep the EMI safe despite the prices going up,” he said.
Mercedes-Benz in India witnessed over 12 per cent growth in 2024 with 19,565 cars delivered. Their top-end vehicle segment grew by 30 per cent while the electric vehicle saw a 94 per cent growth with more than 6 per cent penetration.
luxury car demand
The luxury car segment in India is expected to stay muted in 2025. Luxury car prices could further see an uptick.
“In 2025, it will be muted and flattish for the industry and us. Because of the geopolitical issues around us that we see and which would have an impact. On the positive note, the capital markets are strong, and the fundamentals are in place, which should not change in the mid- to long-term. We cannot absorb the entire forex. If the forex continues to increase further, we have no option but to pass on as little as possible to the customer,” he said.
Disruptions
The company is expecting the development of the economy in the near term.
“The current issues may be temporary and short-term. India is signing free trade agreements with many economies that should further boost the economy and free trade, and further boost business. Luxury car prices will not come down as 95 per cent of the cars are already produced in India. However, it will add to the development of the economy,” added Santosh Iyer.
Published on May 9, 2025
This article first appeared on The Hindu Business Line
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