Why Mercedes is selling fewer cars in India but making more money

Mercedes-Benz Group AG posted its highest-ever revenue in India in 2025, driven by strong demand for top-end luxury cars, even as a price war in the entry segment pulled down overall vehicle sales.

The German carmaker sold 19,007 vehicles in India last year, slightly lower than the 19,500 units sold in 2024, according to CEO Santosh Iyer. The decline narrowed Mercedes’ lead over BMW AG, which sold 18,000 vehicles during the same period.

Despite the dip in volumes, Mercedes said 2025 was its best year on record by revenue, underscoring a deliberate shift toward higher-priced vehicles and profitability.

Luxury car market India: Value over volume

“There is a clear price war happening in the entry luxury segment. We have opted out of it and will continue to opt out of it,” Iyer told Reuters. “We will prefer value over volume.”

Sales of Mercedes’ entry-segment cars fell 23% in 2025. That drop was offset by a 12% rise in demand for top-end models, while AMG performance cars recorded a 34% jump in sales.

The strategy pushed the average selling price of a Mercedes in India to $111,000, up from $98,500 two years earlier, highlighting a growing base of ultra-wealthy buyers.

Mercedes-Benz Group AG revenue hits record

While the company does not publish country-specific financials, disclosures to the Indian government show Mercedes-Benz India generated close to $1.5 billion in revenue in the fiscal year ended March 2025, a 9% increase year-on-year.

With sales of vehicles priced above 15 million rupees ($166,115) rising throughout 2025, Mercedes expects to exceed that revenue figure in the current fiscal year ending March 2026.

India’s luxury car market remains small, accounting for just over 1% of the country’s 4.4 million passenger vehicle sales in 2025. Still, premium brands are battling for share, particularly in the entry segment.

Electric vehicles (EVs) and cost pressure ahead

Mercedes plans to launch 12 new vehicles in India in 2026, including electric vehicles (EVs), AMG models and top-end luxury cars.

Iyer said the company expects single-digit sales growth next year as it works to control costs amid foreign exchange volatility. “Margins will be under pressure, but still, I think we run a very profitable business,” he said.

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