Despite the series of shocks including the latest West Asia conflict and the resultant supply chain disruptions & rising crude oil prices, India’s luxury car market remains resilient, with demand continuing to outpace broader industry expectations

The ongoing crisis has had only a limited impact on the luxury vehicle segment, highlighting the sector’s ability to withstand external economic shocks said Santosh Iyer, Managing Director & CEO, Mercedes-Benz India in an interview. 

He said consumer demand remained robust, with buyers continuing to purchase high-end vehicles despite global uncertainties. And having already increasing price twice this year, the company is gearing up for another price hike to offset rising cost pressure. 

“These crises are now becoming a way of doing business. Ever since Covid, supply chain, semiconductor crisis and so on, we have been navigating through multiple topics. But overall growth is still there, we still see a momentum in the market, consumers are still buying cars, sentiment depends on weeks not months,” he said.

“Mercedes-Benz was the only luxury carmaker to post growth in the first quarter of the year,” he emphasised.

The company, by far the luxury car segment market leader, continues to maintain its forecast of single-digit growth for 2026 reflecting confidence in market momentum and customer sentiment.

While demand has remained unaffected, the crisis has created operational challenges, he stated.

“Rising logistics and supply chain costs, coupled with rupee depreciation, have increased input expenses. We have already implemented two price hikes this year—in January and April—and evaluating another increase to offset cost pressures,” he said.

On the changed business scenario he said, “We have to now manage our business on a monthly, weekly, quarterly basis now. Gone are the days where you can do a long term planning. May be this crisis [West Asia conflict] currently is over but there will be something else coming on the way.”

“So flexibility is the core, thankfully our production, our supply chain all are flexible on powertrain options. On the demand side we are able to adjust based on what the market needs,” he stated.

He said the company has successfully managed supply chain disruptions, ensuring steady vehicle and spare parts availability. 

Some models, including the CLA, have already been sold out for the year, underlining strong customer interest, he said.

The luxury carmaker also remains optimistic about its top-end vehicle portfolio, led by the iconic S-Class. 

“Top-end vehicles account for 27% of Mercedes-Benz India’s sales, while electric vehicles contribute around 20% of sales in this segment,” he added.

The company recently introduced a plug-in hybrid variant of the S-Class in India, offering nearly 100 km of electric-only driving range and catering to customers seeking electrification without fully transitioning to battery-electric vehicles.

Looking ahead, Mercedes-Benz expects both the luxury car industry and its own business to continue growing this year, despite ongoing geopolitical and economic headwinds.

Mercedes-Benz USA and parent company Daimler AG have agreed to pay $149.6 million to settle allegations that the automaker secretly installed devices in hundreds of thousands of vehicles to pass emission tests, a coalition of attorneys general announced Monday.

According to the coalition, between 2008 and 2016, the German automaker equipped more than 211,000 diesel passenger cars and vans with software devices that optimised emission controls during tests but reduced the controls during normal operations. The devices enabled vehicles to far exceed legal limits for nitrogen oxides, a pollutant that can cause respiratory illnesses and contributes to smog.

The States alleged that Mercedes installed the devices because it couldn’t reach design and performance goals, such as fuel efficiency, while complying with emissions standards. The automaker allegedly concealed the devices from state and federal regulators and the public while marketing the vehicles as “environmentally friendly” and compliant with emissions standards.

A spokesperson for the automaker had no immediate comment.

Daimler AG and Mercedes-Benz USA already agreed in 2020 to pay $1.5 billion to the U.S. government and California State regulators to resolve the emissions cheating allegations.

Fifty attorney generals, including the attorney generals of the District of Columbia and Puerto Rico, made up the coalition announced Monday. California was not part of the group.

The settlement calls for the automaker to pay the attorney generals $120 million, with another $29 million payment suspended and potentially waived pending completion of a consumer relief program.

That effort will extend to the roughly 40,000 vehicles with the devices that hadn’t been repaired or permanently removed from the road by August 1, 2023. The owners of those vehicles would get $2,000 per vehicle if they install approved emissions modification software and an extended warranty.

The settlement also calls for Mercedes to comply with reporting requirements and refrain from any further unfair or deceptive marketing or sale of diesel vehicles.

Volkswagen also ended up paying $2.8 billion to settle a criminal case due to emissions cheating.