Mercedes-Benz India may increase vehicle prices again as currency volatility continues to raise costs, even as demand for luxury vehicles remains stable and the company reports its highest sales for the first half of a calendar year in 2026.

Managing Director and Chief Executive Officer Santosh Iyer said the luxury carmaker has already implemented two price increases during 2026. Although the company deferred another revision after the exchange rate briefly improved, renewed weakness in the rupee has brought a further increase under consideration.

"We will further increase prices. We were waiting because we saw a glimmer of hope. The exchange rate came down to Rs. 106-107 (per euro), and now it is back to 109," Iyer told media sources. For context, the Indian rupee is at around 95 to the US dollar.

He said the operating environment remains highly volatile and requires continuous monitoring.

"Further price increases may have a challenge. It is a highly volatile setup, and we need to steer it month by month, quarter by quarter," he said.

Mercedes-Benz has not disclosed the timing or scale of any future price increase.

First-half sales and outlook

The comments follow Mercedes-Benz India reporting its highest sales for the first half of a calendar year. Retail sales increased by 9% year-on-year to 9,768 units during the January-June 2026 period, while second-quarter sales rose by 10% to 4,637 units.

According to Iyer, the company entered the second half of the year with an existing order book and customer demand. However, currency fluctuations, potential further price increases and supply constraints could affect growth momentum.

Mercedes-Benz continues to forecast single-digit sales growth for the full year.

"We still want to maintain growth, but not be euphoric. Cautiously optimistic is better, the prognosis still remains growth, but we don't want to give a double-digit growth projection. We will remain at single-digit growth for the second half of the year," Iyer said.

First-time luxury buyers most affected by higher prices

Iyer said rising vehicle prices are having a greater impact on customers entering the luxury vehicle segment for the first time. While existing luxury vehicle owners are generally better positioned to absorb higher prices, first-time buyers often operate within fixed budgets and may postpone purchases when prices move beyond their planned spending range.

"Many of the first-time buyers to luxury have a tendency to postpone purchases because they planned a certain price point and now it is going up," he said.

To mitigate the impact of higher prices, Mercedes-Benz has expanded its financing options, including programmes such as Agility, which offer lower monthly instalments and longer repayment periods. The company has recorded a higher proportion of customers opting for vehicle financing, while average loan tenures have increased from approximately 46 months to more than 50 months.

"We have seen increased financing percentages for customers opting for finance through programmes like Agility with reduced EMIs. We have seen an increase in loan tenure as well," Iyer said.

He further added that higher new-vehicle prices could support resale values after three years of ownership.

Luxury segment growth trails broader passenger vehicle market

Mercedes-Benz estimates that India's luxury vehicle market grew by approximately 10% during the first half of 2026, with total industry sales reaching around 26,000 units. However, growth in the luxury vehicle segment has lagged behind that of the broader passenger vehicle market.

According to Iyer, pricing has been a significant factor. While Mercedes-Benz and other luxury manufacturers have raised prices, mass-market vehicle prices remain below levels seen before the GST reduction. He said the response to lower prices in the broader market demonstrated that Indian consumers remain price-sensitive and value-conscious.

"India is a price-sensitive, value-conscious market. There was an average 6-8% decrease in prices, and that momentum continues," Iyer said.

The luxury vehicle market is expected to continue growing during the second half of the year, supported by new product launches, although additional price increases and limited availability of some models could affect sales volumes.

Rising customer concerns over E20 fuel quality

Alongside market and pricing challenges, Mercedes-Benz India is also addressing increasing customer concerns related to India's transition to higher ethanol-blended fuels. India has accelerated its ethanol-blending programme and achieved its 20% ethanol-blending target ahead of schedule. While most new passenger vehicles are now being manufactured to operate on E20 fuel, the transition has generated questions among vehicle owners regarding fuel quality and vehicle performance.

According to Iyer, Mercedes-Benz has experienced an increase in customer enquiries regarding E20 fuel and has provided dealers with frequently asked questions (FAQs) to help address concerns.

"In terms of queries, we've seen a lot of anxiety, with a lot of customers asking us and our dealerships. We have given FAQs to our dealers so that they are able to answer them. We were one of the first to get materially compliant E20 cars, as well as emission-compliant E20 cars. The new S-Class hybrid we launched in Bombay is already an E25-compliant car. So I think we, as long as the compliance levels are concerned, are not bothered," he said.

Iyer said Mercedes-Benz vehicles comply with current ethanol-blending requirements and that the company does not have concerns regarding the compatibility of its products with E20 fuel.

Fuel adulteration concerns add to customer anxiety

However, Iyer said the company is observing instances in which fuel-quality issues are being mistaken for problems associated with ethanol blending. According to him, suspected fuel adulteration at some retail outlets is creating confusion among customers and contributing to concerns surrounding E20 fuel.

"We have seen increased fuel adulteration happening under the garb of E20, which is also causing concern because we have some customers who may not have filled the right quality of fuel, and then explaining it to them may be challenging," he said.

He further added that distinguishing genuine E20-related concerns from issues caused by poor-quality or adulterated fuel remains difficult for consumers.

"So this is something for the enforcement agencies and regulators to check because under this E20, even we can see a bit of proliferation of fuel adulteration, which is causing anxiety and concern among customers," he said.

According to Iyer, stronger oversight by enforcement agencies and regulators will be necessary to ensure that fuel quality standards are maintained as India continues to expand the use of ethanol-blended fuels.