Budget 2023 impact: Mercedes India to hike prices of its 3 top-end luxury cars

The Mercedes-Benz India boss emphasised that the marginal rate-hike would have no bearing on the demand for these models. “The EQB anyway doesn’t have road tax — so I don’t see demand coming down — and we don’t have Maybachs for the next few months (an indication of heavy existing demand),” said Santosh, “So it will be manageable.”

Finance Minister Nirmala Sitharaman’s decision to ease certain income tax slabs in the new regime coupled with an easing of the surcharge on the highest tax slab has won plaudits for its intention to ensure more money in the hands of the Indian consumer. Santosh says it works well for Mercedes-Benz, given recent trends surrounding the age bracket of its customers.

“The Indian salaried class used to account for 8 to 10 percent of Mercedes sales, and that share is now 15 percent,” he said. “More money for the salaried class enables this group to upgrade their cars to better models.”

That audience, the company believes, is going to form a large chunk of its future sales in the core luxury segment, even as the overall luxury car segment is all set to see a boom thanks to infrastructure capital outlay, which could result in better roads and expressways.

However, with an uncertain economic climate being the order of the day amid recently skyrocketing inflation, if there’s one competitor that a luxury carmaker will contend with, it’s a renewed priority to save more money. Then there are headwinds from the global economy, which Santosh concedes could have a price impact on cars sold in India. But Mercedes-Benz isn’t too worried on both counts.

“Only four percent of Indian households worth $1 million and above own luxury cars in India as opposed to 16 to 20 percent in other countries,” he pointed out.

“As far as SIPs threatening sales is concerned, Indian consumers have always prioritised saving, and that isn’t new,” Iyer added, “However a consumer with a SIP of Rs 2 to 3 lakh per month can afford Rs 50,000 to a lakh by way of EMIs.”

The mitigated role played by both these factors features heavily in Mercedes-Benz holding firm to its projection of double-digit growth in India in 2023, despite economic uncertainties.

“We continue to expect double-digit growth as things stand,” said Santosh, “We continue to see buyers at showrooms; we see many of them waiting for three to six months for a backlog to end.” In 2022, Mercedes-Benz India registered its most successful year in the country, clocking sales of 15,822 units (YOY rise of 41 percent), with a backlog of 6,000 cars.

Incidentally, Mercedes has announced plans to build its own network of charging stations across the world, starting with geographies like North America before China and Europe are expected to follow. The company hopes to build 6,000 charging stations in all, as it commits to turning completely electric by 2030, in markets that allow for it.

In India, the company estimates that one out of every four Mercedez-Benz cars sold in the next five years will be an EV. In line with these projections, it is building a network of fast chargers at key access points, with 35 such charging stations up and running across various locations. However, Santosh stopped short of committing to a number of charging stations that he hopes will be up and running in a few years.

“We are installing 180-kilowatt fast-chargers on all trunks routes across India and we also want to complement private enterprises who set up charging stations in the country,” said the Mercedes India boss, “Our growth in charging network will be in line with our growth in EV sales, and we want EVs to account for 25 percent of all Mercedez-Benz sales in India by five years.”

For the moment, indications are rife that the luxury carmaker may well be on the way to achieving those numbers. “We are seeing greater demand for EV variants of some of our products than ICE models,” said Santosh, “Ultimately, the right product for the Indian customer, especially on the range and serviceability front, will always sell.”

Mercedes-Benz India is presently refurbishing its existing showrooms into “sales and experience centres,” fitting them with snazzy décor and a cool new look. The company is also consciously looking to expand its service centre network, as car sales continue to mount every passing year.