Rupee slide fuels Mercedes-Benz price hike

Rupee slide fuels Mercedes-Benz price hike

Mercedes-Benz India faced a 13% increase in cost over the past year as the rupee continued to weaken against the euro, inflating the cost of imported parts.The Indian arm of the German luxury carmaker, which imports about 70% of its components, responded with calibrated price hikes, Santosh Iyer, managing director, Mercedes-Benz India told ET. Still, the automaker is noting a trend among Indian customers to splurge, not just on base luxury car models, but on bespoke customisations that often add 鈧60 lakh to 鈧1.5 crore to a car鈥檚 price tag.Mercedes-Benz India raised car prices twice this year鈥攐ne in January and another in June鈥攚ith a third planned for September, said Iyer. The rupee breached the psychologically significant 鈧100 mark against the euro only earlier this week.鈥淲e鈥檝e only passed on about 3% to the market but the rupee depreciation has raised our costs by nearly 13%. The gap is getting harder to absorb,鈥 he said.Live EventsIndian luxury car buyers are however undeterred by the elevated price tags. More than 70% of the company鈥檚 top-end vehicles (TEV), priced above Rs1.5 crore, are being customised through its 鈥淢anufaktur鈥 programme, among the highest globally for Mercedes-Benz. Manufaktur is the cross-brand personalisation range for exclusive exterior equipment and high-quality interior equipment.Mercedes buyers in India are opting for hand-picked wood trims, exotic leather options, and bespoke paintwork, often pushing the price of already top-end vehicles like the AMG GT 63 or Maybach S-Class significantly higher.On Friday, the company unveiled two new sports cars from its 鈥楪T Family鈥欌攖he Mercedes-AMG GT 63 4MATIC with a dealership price of Rs3 crore, and the track-focused Mercedes-AMG GT 63 PR at Rs3.65 crore.”Customisation is not just about indulgence anymore; it鈥檚 about value perception,鈥 said Iyer. 鈥淐ustomers see Nappa leather or special trim as worth the premium 鈥 even with the currency hit.鈥漈he surge in personalised luxury comes even as Mercedes-Benz continues to localise high-volume models鈥攆rom the A-Class to the Maybach S580鈥攖o buffer some of the forex impact.The recently-launched E-Class sedan, for instance, features fully-localised glazing components for the first time, said Iyer. Still, high-value items like powertrains, infotainment systems, and electronics remain heavily Euro-dependent, making price hikes almost inevitable if the rupee remains at current levels.Despite the higher prices, sales of TEV models grew at an estimated 10-12% on-year in the first five months of 2025. This was boosted by a mix of thriving capital markets, resilient consumer sentiment, and lower borrowing costs passed on through the automaker鈥檚 captive non-bank lending company.Recent reduction in interest rates by the Reserve Bank of India helped the NBFC to further cut the cost of borrowing, which it passed on to buyers.鈥淲e are trying to mitigate that (higher prices of cars) with these special EMIs,” said Iyer.(You can now subscribe to our Economic Times WhatsApp channel)

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