Flat Roads Ahead: Mercedes-Benz India Tempers Growth Expectations Despite Electric Surge

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Mercedes-Benz India, the country’s leading luxury carmaker, has signaled a cautious outlook for the fiscal year 2025–26, projecting flat sales growth despite a promising uptick in battery electric vehicle (BEV) adoption. After years of double-digit expansion, the company is now grappling with macroeconomic headwinds, customer indecisiveness, and regulatory uncertainties. While the first quarter showed signs of resilience, the overall sentiment remains tempered, with the brand focusing on consolidating its performance rather than chasing aggressive growth.

Sales Outlook and Market Sentiment:

1. Mercedes-Benz India sold 19,565 units in FY24–25, marking a period of sustained double-digit growth.
2. For FY26, the company expects to maintain last year’s sales volume, citing market volatility and consumer hesitation.
3. Brendon Sissing, Vice-President (Sales and Marketing), emphasized that holding steady would be considered a success given the current economic landscape.
4. Key factors influencing this outlook include GST-related uncertainties and broader macroeconomic challenges.

Q1 Performance and BEV Momentum:

1. The company registered a 10 percent year-on-year growth in Q1 FY26, driven by strong demand in top-end models and BEVs.
2. BEVs accounted for 8 percent of total sales in Q1, up from 4–5 percent last year, indicating growing consumer interest in electric mobility.
3. Mercedes-Benz India reported a 157 percent surge in BEV sales, led by models like the EQS 450 and EQA.
4. Despite this momentum, the company remains conservative about full-year growth due to a high base effect and geopolitical uncertainties.

Top-End Vehicles and Launch Strategy:

1. The brand continues to focus on its top-end portfolio, which includes the S-Class, Maybach, AMG models, and the newly launched CLE 53 4Matic+ Coupe priced at ₹1.3 crore (ex-showroom).
2. Eight new models have been introduced this year, all positioned in the premium segment.
3. The top-end segment is growing at 15–20 percent, contributing significantly to overall performance.
4. Mercedes-Benz does not operate in the entry-luxury segment below ₹50 lakh, with its base offerings starting at ₹65 lakh.

Customer Profile and Regional Focus:

1. The typical Mercedes-Benz buyer in India is aged between 35–40 years, comprising professionals from MNCs, startup founders, doctors, lawyers, and chartered accountants.
2. Sales are concentrated in six major cities—Mumbai, Delhi, Chennai, Bengaluru, Hyderabad, and Ahmedabad—which together contribute 75 percent of total volumes.
3. The company has a presence in over 50 cities across India, but growth is largely driven by established urban markets.

Festive Season Strategy and Events:

1. Mercedes-Benz India is gearing up for the festive season with a target of 5,000–5,500 units between September and November.
2. To boost engagement, the company will host the Dream Days Festival starting in October, with the Ahmedabad leg scheduled for November 1–2.
3. The event will showcase the full range of Mercedes-Benz vehicles, including sedans, SUVs, BEVs, AMGs, and the iconic G-Class.

Competitive Landscape and Industry Trends:

1. The overall luxury car market in India is expected to remain flat, with industry-wide festive sales projected at 10,000–12,000 units.
2. Mercedes-Benz acknowledges the impact of price hikes, geopolitical tensions, and regulatory shifts on consumer sentiment.
3. The company welcomes competition, including Tesla’s entry into India, viewing it as a catalyst for broader EV adoption.

Conclusion:

While Mercedes-Benz India remains a dominant force in the luxury automotive segment, its tempered expectations for FY26 reflect a pragmatic approach to navigating economic and regulatory complexities. The surge in BEV sales and continued investment in top-end models offer a silver lining, but the road ahead demands strategic agility and consumer-centric innovation.

Source: The Hindu Business Line