Mercedes-Benz To Add 20 New Dealerships In Smaller Indian Cities

Germany’s Mercedes-Benz has announced plans to strengthen its footprint in India by adding 20 new dealerships and service outlets in 2025. This expansion will primarily target smaller cities, where young, affluent business owners are increasingly investing in luxury goods.

The move comes as Mercedes-Benz India reported record sales of over 19,500 vehicles in 2024, a 12 per cent increase from the previous year. The growth was driven by new car launches and a robust portfolio of electric vehicles (EVs), whose sales nearly doubled during the period.

Santosh Iyer, CEO of Mercedes-Benz India, highlighted a generational shift in attitudes toward luxury purchases, especially in smaller cities. "Now the second and third generations have taken over the family business, and these guys have studied abroad, come back, and are able to consume without guilt. It is not only cars but even watches and other luxury," Iyer told Reuters.

Mercedes, the top-selling luxury car brand in India, currently operates 125 outlets across the country. The company’s strategy involves focusing on smaller cities like Kanpur, with a population of 3 million, and Patna, home to over 2 million residents. In these areas, demand for high-end and electric models outpaces entry-level cars. Expansion in such cities will begin with service centres, Iyer added.

The brand also plans to introduce eight new car models in 2025, including EVs and aims to surpass its 2024 sales record. Much of its growth is attributed to top-end models priced above USD 175,000, which now constitute a quarter of the company’s sales in India. The average selling price of a Mercedes vehicle in India increased to Rs 9.5 million (USD 110,600) in 2024 from Rs 8.9 million the previous year.

Smaller cities are emerging as promising markets for Mercedes’ EV segment. Unlike metropolitan areas, many customers in smaller towns reside in stand-alone homes with adequate space for charging infrastructure.

However, Iyer noted that India’s major cities, including Mumbai and Delhi, remain dominant, contributing 80 per cent of the company’s total sales. In these markets, luxury cars account for 2-3 per cent of overall car sales, compared to 1.1 per cent in smaller towns.

"Top-end cars continue to grow and outgrow entry and core segments also. These are promising signs on the changing structure of the market," Iyer said.

Luxury vehicles currently represent just 1 per cent of India’s annual car sales of around 4 million units but are expanding at a faster rate than the overall market. BMW, Mercedes-Benz’s closest competitor, also recorded strong growth, selling nearly 16,000 vehicles in 2024.

Also Read: BMW Achieved its Best-Ever Car Deliveries in India Last Year