Mercedes-Benz India has confirmed yet another 1.5% price hike, set to take effect in September 2025. This marks the brand’s third price revision this year, following similar hikes in January and June. The reason? Soaring input costs and continued pressure from currency fluctuations, particularly the Euro’s climb past ₹99. Company CEO Santosh Iyer noted that while Mercedes had initially priced its models when the Euro was around ₹89–₹90, the weakening rupee has drastically inflated import bills. About 70% of the parts still come from Europe, even though some localization efforts are in place. This makes the brand very vulnerable to changes in the value of the euro. As a result, the company has opted to phase out these hikes over the year rather than pushing a steeper increase all at once.
Component Imports & Currency Pressures
Despite localizing over a third of its vehicles, Mercedes-Benz still depends significantly on imported components such as engines, electronics, gearboxes, and other essential parts sourced from Europe. As the rupee declines compared to the Euro, the total cost of these components has risen sharply. This, in turn, affects final pricing, especially for high-end models. While Indian manufacturing does provide some cushion, it simply isn’t enough to absorb the full 13% increase in overall production and logistics costs recorded over the past year. According to Iyer, the company’s pricing strategy is a necessary response to maintain quality and performance standards while staying financially sustainable in India’s premium automotive space. He also hinted that the brand is keeping a close watch on forex trends, and further adjustments cannot be ruled out if the rupee continues its downward trajectory.
Financing Eases The Blow For Buyers
Notably, despite the increase in vehicle prices, the monthly EMIs for most Mercedes buyers have stayed consistent. This has been facilitated by two back-to-back interest rate reductions from the Reserve Bank of India (RBI) and similar actions by Mercedes-Benz Finance, the company’s non-banking financial company (NBFC) division. With roughly 80% of Mercedes vehicles purchased through financing, this approach has been vital in sustaining demand. Buyers are absorbing the price hikes more comfortably due to these EMI stabilizations, even as sticker prices go up. Iyer remarked that despite the challenging global economic landscape, strong sales were recorded in May and June, indicating that the luxury car market in India continues to show resilience. The brand is banking on a strong festive season ahead, supported by improved finance offerings and an appetite for premium mobility.
Resilient Growth Amid Economic Challenges
Despite the economic turbulence and currency fluctuations, Mercedes-Benz India is accelerating its growth strategy. The company is enhancing its presence with the expansion of its exclusive “Atelier Experience” showrooms, aiming for 30 outlets by year-end, and launching high-performance luxury models like the AMG GT 63 and GT 63 PRO, priced between ₹3 Crore and ₹3.65 Crore.
The brand’s skill in managing pricing despite increasing import expenses, by reducing EMIs and shouldering some financial pressures, showcases its strength. With a robust demand for luxury cars and interest rates leveling off, Mercedes-Benz is optimistic that it will maintain its progress in the face of challenges. These strategic moves underline Mercedes-Benz India’s dedication to broadening its presence and remaining competitive in a challenging market.
