{"id":4495,"date":"2026-01-27T10:29:50","date_gmt":"2026-01-27T10:29:50","guid":{"rendered":"https:\/\/www.motozite.com\/blog\/?p=4495"},"modified":"2026-01-27T10:29:50","modified_gmt":"2026-01-27T10:29:50","slug":"mercedes-benz-india-ftas-luxury-car-demand","status":"publish","type":"post","link":"https:\/\/blog.motozite.com\/mercedes-benz-india-ftas-luxury-car-demand\/","title":{"rendered":"How Mercedes-Benz India Sees FTAs Driving Luxury Car Demand"},"content":{"rendered":"

In a significant industry update, Mercedes-Benz<\/strong><\/span><\/a> India CEO Santosh Iyer has highlighted the role that upcoming Free Trade Agreements (FTAs) could play in boosting demand for luxury cars<\/strong><\/span><\/a> in India. This development comes at a critical time as the market evolves amid global trade shifts and domestic policy reforms.<\/span><\/p>\n

The discussion around FTAs has far-reaching implications. It impacts not only Mercedes-Benz but also the broader Indian automotive sector, premium car buyers, and policymakers who are currently shaping the national trade strategy.<\/span><\/p>\n

Mercedes-Benz India\u2019s FTA Perspective: Driving Growth over Price Cuts<\/b>\"Santosh<\/span><\/h2>\n

According to Santosh Iyer, FTAs-including prospective agreements with major partners like the European Union and the United Kingdom-are expected to stimulate consumer demand by improving market access and boosting economic sentiment.<\/span><\/p>\n

However, Iyer stresses that the primary benefit is market expansion rather than dramatic price reductions. Since approximately 95 percent of Mercedes-Benz<\/strong><\/span><\/a> vehicles sold in India are locally produced, the direct impact of reduced import duties may be limited. Locally assembled models already benefit from lower duty structures compared to Fully Built Units (CBUs).<\/span><\/p>\n

Key Insight:<\/b> FTAs serve as a catalyst for market expansion by enhancing consumer confidence and economic activity, rather than acting as a guaranteed path to cheaper luxury vehicles.<\/span><\/p>\n

Context: Mercedes-Benz India\u2019s 2025 Market Performance<\/b>
\n<\/b><\/h2>\n

\"Mercedes-Benz<\/p>\n

In 2025, Mercedes-Benz India experienced a slight volume decline of approximately 2.85 percent, retailing 19,007 units compared to 19,565 in 2024. This was the brand\u2019s first sales dip in five years, primarily due to softening demand in the entry-level luxury segment.<\/span><\/p>\n

Despite this dip in volume, the brand\u2019s performance remained strong in several key areas:<\/span><\/p>\n

    \n
  1. Record Revenue:<\/b> 2025 was the best year in the company\u2019s history for revenue and profitability, driven by a strategic pivot toward ultra-luxury models.<\/span><\/li>\n
  2. Top-End Growth:<\/b> The Top-End Vehicle (TEV) segment-including the S-Class<\/strong><\/span><\/a>, Maybach, and AMG<\/strong><\/span><\/a> variants-grew by 11 percent and accounted for 25 percent of total sales.<\/span><\/li>\n
  3. EV Momentum:<\/b> Battery Electric Vehicle<\/strong><\/span><\/a> (BEV) sales rose by 12 percent, with the EQS SUV<\/strong><\/span><\/a> emerging as a leader in the luxury electric space.<\/span><\/li>\n
  4. Market Leadership:<\/b> Mercedes-Benz maintained its position as the top luxury carmaker in India, though the gap with competitors like BMW narrowed.<\/span><\/li>\n<\/ol>\n

    Why FTAs Matter Beyond the Price Tag<\/b><\/h2>\n

    The outlook from Mercedes-Benz aligns with a broader economic narrative regarding trade liberalization. The benefits of these agreements extend beyond simple tariff math:<\/span>
    \n<\/span><\/p>\n

    \"2025<\/p>\n

      \n
    1. Market Reach:<\/b> FTAs expand the reach for both Indian consumers and exporters, fostering a more interconnected trade environment.<\/span><\/li>\n
    2. Investment and Jobs:<\/b> Enhanced access to global markets typically encourages foreign direct investment (FDI) and creates high-skilled employment opportunities.<\/span><\/li>\n
    3. Global Portfolio Positioning:<\/b> Increased demand for luxury vehicles can strengthen India\u2019s position as a vital market within the global portfolios of international automakers.<\/span><\/li>\n<\/ol>\n

      While negotiations with the EU and UK are progressing, industry stakeholders note that only a small portion of the total vehicle market-mostly high-end imports-will see significant tariff changes, as the majority of luxury cars sold in India are already localized.<\/span><\/p>\n

      What This Means for Buyers and the Indian Auto Market<\/b><\/h2>\n

      The unfolding FTA landscape will affect different stakeholders in distinct ways:<\/span><\/p>\n

        \n
      1. \n

        For Luxury Car Buyers<\/b><\/h3>\n<\/li>\n<\/ol>\n