Owing to the rupee’s sharp depreciation this year, German luxury carmaker Mercedes-Benz will raise prices across its entire model range, effective January 1, 2026. The hike, capped at 2%, reflects persistent forex pressures that have defined the luxury auto segment throughout 2025.
Before announcing the fresh hike, Mercedes increased the prices of its passenger vehicles by around 3.5-4% this year. Industry experts believe that other luxury car brands will follow Mercedes’ lead and go for another round of price revisions.
“Currency headwinds have persisted longer than we anticipated this year, with Euro consistently trading over the INR 100 mark. This prolonged volatility affects every aspect of our operations, from imported components for local production, to completely built units,” said Santosh Iyer, Managing Director & CEO, Mercedes-Benz India.
Compared to the levels seen last year, the rupee has depreciated around 6% against the US dollar. In the case of the British pound and the euro, the decline is in double digits. India imports most of its luxury cars or components for luxury cars from Germany and the United Kingdom.
Mercedes said that the currency environment has created substantial cost pressures across the supply chain, affecting both imported components for local assembly, as well as the import of CBU (completely built-up vehicles). It added that despite the company's aggressive localisation strategy, which continues to absorb the bulk of increased costs, a selective price adjustment has become essential to maintain operational sustainability.
Besides forex challenges, Mercedes’ price hikes are also driven by increased material costs, inflationary pressures, and logistics expenses leading to higher operational costs. “RBI’s continuous repo rate reduction has enabled Mercedes-Benz Financial Services to pass on the benefits to end customers, thereby mitigating price increase effect to a large extent,” said Iyer.
Mercedes-Benz has become one of the first carmakers to announce a price hike following changes in GST rates for passenger cars in September this year. Under the revised tax structure, the GST on luxury vehicles has come down to 40% from 45–50%. That revision allowed Mercedes-Benz to cut prices across its lineup.