NEW DELHI, INDIA – July 14, 2025
Luxury carmaker Mercedes-Benz India has announced that it will increase the prices of its vehicles by 1-1.5% starting in September 2025. This marks the third price hike by the German automaker this year, following similar adjustments in January and July. The primary reason cited for this latest increase is the continued weakening of the Indian Rupee against the Euro.
Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, confirmed the impending price adjustment. “There is another price hike coming up in September, because of the Euro. If you see, the last one month has remained at the 100 mark [for the Euro against the Indian Rupee], and that has not changed. Therefore, we will have to undertake an increase as well in September,” Iyer told PTI in an interaction.
Battling Currency Fluctuations
The significant depreciation of the Rupee against the Euro directly impacts Mercedes-Benz’s import costs. While Mercedes-Benz does localize over 30% of its car manufacturing in India, approximately 70% of the components and completely built units (CBUs) still rely on European content. When the Euro strengthens, the cost of these imported parts and vehicles rises, putting pressure on the company’s margins.
Iyer acknowledged that these price adjustments are necessary to mitigate the impact of adverse currency fluctuations, a factor largely beyond the company’s control.
Impact on Sales and Consumer Strategy
Despite the series of price hikes, Mercedes-Benz India remains optimistic about market demand. Iyer noted that the overall economic growth in India continues to drive consumer appetite for luxury vehicles. He also highlighted that reduced interest rates have helped to balance the monthly equated monthly installments (EMIs) for purchasers, largely mitigating the impact of the increased vehicle prices. Around 80% of new Mercedes-Benz vehicles in India are purchased through financing options.
“When you look at the EMIs, we have tried to keep the same, though the price of the car has gone up. So, that helps us to mitigate the impact of price increase to a large extent,” Iyer explained. He added that customers understand these price adjustments are a reality of currency fluctuations in the global market.
While the overall passenger vehicle market in India is growing at a modest 2-3%, the luxury car segment has demonstrated slightly better growth at around 5-6%. However, Iyer also acknowledged that the company’s growth for the year might remain relatively flat due to ongoing geopolitical tensions and other global economic challenges.
Mercedes-Benz continues to manage its supply chain effectively, with Iyer stating that the company has sufficient stocks and is not currently affected by concerns such as the availability of rare earth magnets. This proactive approach aims to ensure that price adjustments are primarily a response to currency movements rather than supply-side constraints.
As the Indian luxury car market navigates evolving economic conditions, Mercedes-Benz’s strategy of incremental price adjustments reflects a careful balance between maintaining profitability and sustaining market demand.
