Mercedes may hike vehicle prices in April if rupee continues to slide against euro

Udaipur: Mercedes-Benz India may increase prices of its model range in April, if the rupee continues to weaken against the euro, Managing Director & CEO Santosh Iyer said on Tuesday.

The company, which took a price hike in January this year, also expects the luxury car sales to remain under stress for at least two quarters with muted demand.

"When we look at the exchange rate, it has really been a bit concerning in the last 20 days because the euro has already reached 95 levels, and we have priced the cars at 90 (rupee level). So there's a significant increase in this, and that may lead to price increase if this continues from April," Iyer told reporters here.

Euro's exchange rate in terms of Indian rupee has been witnessing a continuous fall this year. From the level of 89.96 on February 12, the exchange rate hit the record low of 95.13 against a euro on March 12, according to RBI data. A euro was valued at Rs 94.55 as on Tuesday.

The company needs to react to any averse fluctuations in the forex exchange rate, he stated.

"The five rupee increase is almost five to eight per cent increase in exchange rate. So we will have to see that," Iyer said.

He noted that the company expected growth momentum to continue in the domestic market at the start of the year but the geo political situation is impacting the overall customer sentiments.

"Luxury is also a sentiment driven demand in that sense. So currently, the sentiments are muted when you look at capital markets, when you look at some of the other sectors, because of various geopolitical uncertainties," Iyer stated.

He further stated: "So with that sense, we need to just wait for those sentiments to come back, because structurally, we don't see anything wrong from the economy side or the consumption side." Iyer noted that the brand still remains very desirable and so the growth should come in at the right time, but maybe one or two quarters may see a flat growth, and then it should come back to a better growth rate.

"On a full year basis, we still feel it should be either flat or slightly better than last year as such. So we need to wait for it," he said.

On impact of entry of players like Tesla in the Indian market, Iyer said: "I think new players always help to grow the market. So we would always welcome new players to also drive electrification and demand as such." When asked about the impact of the Maharashtra government's decision to impose a 6 per cent tax on electric vehicles priced above Rs 30 lakh, Iyer said the move can have a negative effect on the EV demand.

"One of the reasons EVs were given this exemption by different states is to promote decarbonisation... in the past, we have seen an impact on demand in those states whenever there has been an increase in the taxes," Iyer said.

The Maharashtra government has proposed a 6 per cent tax on electric vehicles priced more than Rs 30 lakh in the budget for the fiscal 2025-26.

Mercedes-Benz India retailed a record 19,565 cars in 2024.

The company sold 17,408 units in January-December period in 2023.