Mercedes India CEO says upcoming FTAs to boost car demand

Bengaluru: Upcoming free trade agreements (FTAs) will stimulate consumer demand through lower prices and help Mercedes-Benz India sell more cars, the luxury-vehicle maker’s India chief executive Santosh Iyer said.

"FTAs will give India access to different markets...That effect should help drive overall consumer demand and sentiment, which will help us sell more cars. It's like when road infrastructure grows, luxury cars start selling more," Iyer told ET in Bengaluru.

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His comments assume significance as the company in 2025 reported a decline in sales for the first time in five years.

The German automaker’s India sales last year fell 3% to 19,007 units. But the company maintained its top position with roughly 36% of the luxury-car market, though competitor BMW with a 34% share narrowed the gap significantly, as ET reported last week.

Entry-level models drove the volume drop, declining 23% amid a price war in the segment, Iyer said.

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Although unit sales declined, the automaker achieved record revenue in India by focusing on premium offerings. Luxury models like the S-Class, Maybach and AMG variants posted double-digit growth. Sales in the performance-focused AMG line jumped over a third, while electric vehicles gained traction with improved sales, as reported previously by ET.

Mercedes-Benz sees top-end models as major contributors of revenue in most regions where it operates. "Even in tier-2 and tier-3 cities, people are still buying G-Wagons and Maybachs," Iyer said.

The company recently announced it would open 20 outlets in three Indian cities where it currently does not have a retail presence.

Doubling down on this premium strategy, "we are planning to localise two more cars in the top-end segment", Iyer said. The move follows the company's launch of local assembly for the Maybach GLS at its Chakan plant near Pune, the first such facility outside the US to roll out the model, on January 15.

While the company looks to the upcoming union budget to help boost demand, it expects sales to remain flat.

India remains a top five global market for the Maybach brand, the CEO said.

Iyer spoke to ET on the sidelines of an event to inaugurate a sales and service facility in Bengaluru. The company has around two dozen partners in India, including three in Bengaluru, and 140 touchpoints.