Mercedes-Benz’s India CEO has told Reuters that an increasing number of Indian buyers are choosing electric cars as their first luxury vehicle, a trend that is helping the German automaker boost its sales.
The luxury car segment in India is experiencing a surge in sales, with Mercedes-Benz setting new records as a market leader. In the first six months of 2024, Mercedes sold 9,300 vehicles in India, with electric car models accounting for 5%, doubling the adoption rate from 2.5% the previous year.
During the Mercedes EQS 680 SUV launch event on September 5th, Santosh Iyer, the CEO of Mercedes-Benz India, mentioned that a younger demographic of buyers is shifting towards electric cars in search of a “distinctive” appeal. The new 7-seater electric Maybach, priced at 14.1 million rupees (approximately $168,200), targets these trend-setting individuals, including professionals like doctors, lawyers, and architects who want to showcase their leadership in embracing the electric vehicle revolution.
Iyer highlighted that approximately 15% of all electric cars sold by Mercedes in India this year were purchased by first-time luxury car buyers, a significant increase from the 5% reported in 2023, attributed to the introduction of new electric SUV models.
Although the electric vehicle market in India is relatively small, it is steadily growing. Last year, electric car models accounted for only around 2% of the total 4.2 million vehicle sales in India. The government aims to increase this share to 30% by 2030.
Mercedes announced a $24 million investment in India in January, expanding its portfolio to sell 18 internal combustion engine cars and 6 electric vehicles in the country.
In 2022, the German automaker started assembling electric cars in India to circumvent the high import tariffs of up to 100% on fully imported vehicles. The EQS SUV marks its second locally assembled electric car.
Iyer emphasized the company’s commitment to the electric vehicle transition through increasing localization rather than solely relying on imports, stating, “We take (electric vehicles) transformation seriously, not only by importing products but also by pushing this transformation strongly through increasing localization.”
Compared to traditional combustion-engine vehicles, the lower Goods and Services Tax (GST) rate and tax exemption policies make electric cars more appealing to consumers. Iyer explained, “The GST for electric vehicles is only 5%, while internal combustion engine (ICE) models attract a GST of 43%. Furthermore, some cities exempt electric vehicles from road tax, allowing manufacturers like us to price electric models competitively or even cheaper than internal combustion engine vehicles.”
Apart from Mercedes-Benz, BMW also reports strong demand and continuous growth in sales of their electric vehicles. BMW India leads in the luxury electric car segment with models like i7, iX, i5, and Cooper SE, surpassing 2,000 units in sales in the first half of 2024.
Additionally, Mercedes-Benz recently announced the launch of the EQG, an electric version of the G Wagon. While this model may not hit the Indian market until late this year or early 2025, the anticipation is high with Mercedes already receiving orders from 80 customers at a booking price of 35 million rupees (approximately $417,259).