Benz it like Mercedes: Winner of India luxe ride race just beat Motown slowdown in style

At a time when global uncertainties and weakening buyer sentiment are pulling growth down in India’s luxury car market, has bucked the trend, posting its best-ever annual sales and reinforcing its dominance in the high-end segment.

The German luxury carmaker retailed 19,363 units in FY25-26, marking its highest-ever yearly performance, even as overall industry growth slowed to low single digits, recent data showed.

In contrast, rivals such as BMW India have reported softening demand, citing global macroeconomic headwinds and geopolitical uncertainties impacting consumer sentiment.

Mercedes-Benz’s performance was underpinned by a sharp pivot towards top-end luxury vehicles and a calibrated “value over volume” strategy, helping it sustain growth despite a broader market slowdown, a press statement by the company said.

Premiumisation: New trick of the trade

The divergence in performance highlights a clear shift in India’s luxury car market. While overall growth in the market has moderated to around 3% amid global jitters, demand at the top end remains resilient, even accelerating.

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Mercedes-Benz reported a 16% growth in its top-end luxury segment in FY25-26, with these vehicles accounting for 27% of its total sales. In the January–March quarter, sales in this segment rose even faster, up 25% — a sign of sustained appetite for high-priced offerings such as the S-Class, Maybach range and AMG performance cars.

On the other hand, entry-level luxury segments across the industry have come under pressure as price-sensitive buyers have likely delayed purchases. Mercedes-Benz itself reported an 18% decline in its entry luxury segment, mirroring the broader industry trend.

Executives at BMW India have indicated that demand has softened in recent months (end FY 25-26 and early FY 26-37), particularly as global uncertainties — including tensions in the Gulf region — weigh on affluent buyers’ purchasing decisions.

The Mercedes manual to beat slowdown

According to the press statement, Mercedes-Benz’s resilience has been driven by its balanced portfolio. Its “core” segment — including the C-Class, long-wheelbase E-Class and GLC and GLE SUVs — continued to see steady demand, with the E-Class LWB retaining its position as India’s best-selling luxury car.

The company says that at the same time, it has leaned heavily into exclusivity and personalisation, with long waiting periods of up to 12 months for select top-end models such as the AMG G63 and Maybach S-Class indicating robust demand among ultra-high-net-worth buyers.

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The strategy seems to be in contradiction to strategies of rivals that rely more on entry-level volumes, which are currently more vulnerable to economic uncertainty.

Electrifying race

Another key differentiator has been Mercedes-Benz’s strong push in electric vehicles. Battery electric vehicles accounted for 20% of its top-end sales in FY2025-26, with high-end EVs priced above Rs 1.4 crore witnessing an 85% surge, data shows.

Models such as the EQS SUV have emerged as top sellers in the luxury EV space, positioning the company ahead in the premium electrification race. The planned launch of the electric CLA later this month is expected to further strengthen its EV portfolio.

It may noted though that industry-wide EV adoption in the luxury segment remains uneven, with other carmakers yet to achieve similar scale at the top end.

For Merc, the more the merrier

Mercedes-Benz says it is also doubling down on its retail and customer experience strategy. The company plans to open over 20 new luxury outlets in 2026, backed by investments exceeding Rs 450 crore from franchise partners. Expansion into emerging markets such as Visakhapatnam and Varanasi, alongside strengthening metro presence, is expected to widen its reach.

Mercedes sees its focus on customer experience and network quality as a key differentiator in a segment where purchase decisions are increasingly being driven by brand experience rather than price alone.

Road-ahead: Resilience at the top, caution below

The contrasting trajectories of Mercedes-Benz and its peers likely suggest a divergence in India’s luxury car market. While demand at the ultra-premium end remains strong, driven by rising wealth and aspirational consumption, the broader luxury segment is showing signs of fatigue.

With global uncertainties likely to persist, industry growth may remain subdued in the near term, Mercedes said. However, the company’s emphasis on top-end vehicles, electrification and customer experience appears to be insulating it from the global slowdown, it added.