Mercedes and BMW recalibrate as premium mass-market brands crowd India’s luxury-car market

Toyota, Kia, MG and BYD are pushing higher-priced models into India’s premium car market. Mercedes-Benz is prioritising top-end value growth, while BMW is using EVs, long-wheelbase models, localisation and upgrades from mainstream buyers to widen its base.

— Source publishedSun, 27 Sept, 2026, 05:30 IST·First seen Sun, 27 Sept, 2026, 05:34 IST·Source ET Small Business

What happened

Mercedes-Benz India · Premium mass-market models from Toyota, Kia, MG and BYD are intensifying competition in India’s luxury-car market. Mercedes-Benz is

Key facts

  • Luxury cars' share of India's passenger-vehicle market fell to 0.98% in calendar 2026 from 1.1% in 2025.
  • Premium models from mainstream/new-age brands increased share to 0.14% from 0.12%.
  • Mercedes-Benz India's average selling price rose to about ₹1 crore from about ₹60 lakh over the past couple of years.
  • Mercedes-Benz's top-end portfolio grew 20% in H1 2026 and represented 30% of sales.
  • BMW EVs account for 26% of sales, versus 8% two years earlier.
  • About 40% of BMW customers upgrade from non-luxury cars; a similar proportion switches from other luxury brands.
  • Selected premium mass-market models had a weighted average retail price of ₹1.19 crore, versus ₹91.3 lakh for traditional luxury brands.

Why this matters

The upscale push by mainstream and new-age automakers makes India attractive for partnerships, localization, charging, software and premium-retail investments that strengthen luxury-brand ecosystems.

What to watch

  • Monthly registrations and order backlogs for BMW iX1/i4/i5, Mercedes EQ models, Toyota Vellfire, Kia EV9, MG premium SUVs and BYD models.
  • Changes in import duties, EV policy, local-manufacturing incentives and homologation rules affecting premium vehicles.
  • Average transaction prices, finance penetration, discounting and residual values across luxury and premium-mainstream models.
  • Announcements of CKD assembly, battery localisation, dealer-network expansion or new luxury-format outlets.
  • Whether premium-mainstream brands sustain share gains without heavy discounting, especially in major metros.
  • Mercedes-Benz versus BMW mix shifts between entry models, locally built EVs, top-end vehicles and long-wheelbase sedans.
  • Mercedes-Benz is likely to increase allocations of AMG, Maybach, G-Class, high-spec SUVs and limited editions while expanding personalization, concierge service and certified pre-owned programs.
  • BMW is likely to broaden locally assembled EV and long-wheelbase offerings, target affluent first-time luxury buyers with finance packages, and use technology upgrades to stimulate replacements.
  • Toyota, Kia, MG and BYD are likely to launch larger SUVs, premium EVs and hybrid models with luxury-style features priced below German marques.
  • Dealers will invest more in premium-format retail, charging infrastructure, trade-in programs and used-car sourcing as upgrade customers become a larger demand pool.
  • Luxury OEMs may push for additional localisation of components and assembly to defend pricing against lower-cost premium entrants.

Also reported by