Luxury Auto Market 2026: Single-Digit Growth Amid Forex Pressure, Says Mercedes-Benz India CEO

Luxury Car Market Outlook for 2026

India's luxury car market is projected to see subdued single-digit growth in 2026, according to Santosh Iyer, Managing Director & CEO of Mercedes-Benz India. Demand is expected to remain stable but unlikely to surge due to persistent currency volatility and a cautious sentiment among first-time buyers, alongside continued pressure in the entry-level segment.

The overall luxury car segment, comprising vehicles above ₹50 lakh, is estimated to have closed the previous calendar year with approximately 52,000 units. This represented a modest 1.6% increase, marking the slowest growth pace observed since the pandemic. Mercedes-Benz India itself experienced a 3% year-on-year sales decline to 19,007 units, contributing to the overall market's tempered performance.

Mercedes-Benz India's Strategic Response

Despite the challenging market environment, Mercedes-Benz India is preparing for 2026 with an ambitious strategy. The company intends to introduce 12 new models, encompassing both internal combustion engine and electric powertrains. Expansion of its local manufacturing capabilities and retail network is also a priority.

While overall unit volumes may have dipped, Mercedes-Benz India achieved its best-ever revenue performance. This growth was propelled by a richer product mix, with Top-End Vehicles (TEVs) like the S-Class, Mercedes-Maybach, and AMG models seeing an 11% increase. The high-performance AMG portfolio saw a significant surge of 34%, while battery electric vehicles (BEVs) recorded 12% growth.

Ultra-Luxury and EV Adoption

India has ascended into the top five global markets for Mercedes-Maybach for the first time in 2025. This growing demand has prompted Mercedes-Benz to commence local production of the Mercedes-Maybach GLS, making India the first market outside the United States to assemble this ultra-luxury SUV. Localisation efforts aim to significantly reduce the entry price while maintaining customisation and premium offerings.

Electric vehicles are a crucial growth driver, with BEVs constituting 20% of all top-end Mercedes-Benz vehicles sold in India. Notably, nearly 70% of the company's EV sales exceed ₹1.25 crore, indicating that EV adoption in the luxury segment is primarily being driven by the premium end of the market.

Overcoming Market Headwinds

Mercedes-Benz has launched MB.Charge Public in India, an initiative that aggregates over 9,000 DC fast chargers into a unified digital ecosystem for seamless discovery, authentication, and payment. This addresses public charging concerns for EV owners.

However, the overall luxury car market remains constrained around 50,000 units annually. Iyer attributed this range-bound performance to intense price competition in the entry luxury segment, currency-driven price hikes, and limited price elasticity among new buyers. The company consciously avoids price wars to protect residual values and brand equity. Sustained acceleration in luxury car demand, Iyer noted, will hinge on improved buyer sentiment, currency stability, and renewed confidence among first-time purchasers.