Winning Bizness Desk

Mumbai. German luxury carmaker Mercedes-Benz India has announced that it will increase prices of all its models by 1 to 1.5% starting September 2025. This marks the third price revision by the company this year, following earlier hikes in January and July. The revision will be implemented in two phases, with the first already executed in June and the second due in September.

Rupee depreciation behind cost burden

According to Managing Director and CEO Santosh Iyer, the price hike is being driven primarily by the Indian rupee’s continued depreciation against the euro. The euro, which earlier hovered around ₹89-90, has now crossed ₹98, leading to higher import costs for the company. Since around 70% of the components used in Mercedes-Benz vehicles are sourced from Europe, the weakened rupee has significantly raised production costs.

Cost burden now being passed to consumers

Santosh Iyer explained that Mercedes-Benz India had so far absorbed the increased costs internally but is now compelled to pass on some of the burden to customers. The pricing adjustment aims to maintain financial sustainability while continuing to offer quality service and products. The company emphasized that this step was essential due to the persistent cost pressures from foreign exchange rates and imported components.

Limited impact expected on sales

While acknowledging that the price rise may slightly affect demand, Iyer added that the recent 50 basis point cut in the Reserve Bank of India’s repo rate could offset this impact by easing monthly EMI burdens for buyers. With nearly 80% of luxury car purchases financed through loans, lower interest rates are expected to encourage continued customer engagement despite the price hike.

Luxury car demand stays resilient

Despite cost-related challenges, demand in the Indian luxury car segment remains strong. The segment has recorded a 5-6% growth this year, which is significantly higher than the 2-3% growth seen in the general passenger vehicle market. This consistent performance suggests continued consumer interest in premium vehicles even amid pricing fluctuations.

Mercedes-Benz’s strong sales and EV push

Between January and September 2024, Mercedes-Benz India sold 14,379 units, a 13% increase compared to the same period last year. The company’s electric vehicle (EV) business is also witnessing substantial growth, recording a 73% rise in sales. EVs now contribute 11% to the company's total sales. To further expand its presence, Mercedes-Benz plans to open 30 new luxury touchpoints across India.

Supply chain stable despite global issues

On global challenges, Iyer acknowledged that geopolitical tensions could limit overall growth this year. However, he highlighted that Mercedes-Benz has successfully managed its supply chain, avoiding disruption from shortages of rare earth magnets and similar components. The company remains confident in the long-term stability of its business, bolstered by demand, low interest rates, and strategic cost management.

7 Summary Points

• Mercedes-Benz India to raise car prices by 1-1.5% from September 2025.
• This is the third price hike this year after similar revisions in January and July.
• Rising import costs due to weak rupee against euro is the main reason for the hike.
• Company had been absorbing cost burden but now passing part of it to consumers.
• Luxury car demand remains steady, with 5-6% market growth this year.
• EV segment growing fast with 73% rise; 11% of total sales now from electric vehicles.
• Plans to open 30 new luxury touchpoints; supply chain remains stable despite global tensions.