Mercedes-Benz Shifts Focus from Major Cities to Minor Cities for Expansion

Germany's Mercedes-Benz, following a year of record sales in India, plans to open an additional 20 dealerships or service outlets in 2025, focusing primarily on minor cities where young, well-traveled business owners are increasingly indulging in luxury goods. India's rapid economic growth has prompted a shift in attitudes toward luxury purchases, especially among the younger generation. Unlike their elders, who prioritized frugality and saving, younger Indians, particularly those in the second and third generation of family businesses, are more open to luxury consumption. “They’ve studied abroad, come back, and are able to consume without guilt,” explained Santosh Iyer, CEO of Mercedes-Benz India. This shift is not limited to cars but extends to watches and other luxury items as well.

As a result, Mercedes-Benz, which currently operates 125 outlets in India, is looking beyond the major cities like New Delhi and Mumbai. Smaller towns such as Kanpur, with a population of 3 million, and Patna, with over 2 million residents, are showing a growing demand for high-end and electric models of luxury vehicles rather than entry-level ones. In these cities, Mercedes will first expand with a service center before establishing a full dealership.

Mercedes-Benz, the best-selling luxury car brand in India, recorded over 19,500 vehicle sales last year, reflecting a 12% increase. This success was driven by new car launches and a strong portfolio of electric vehicles (EVs), which saw nearly double the sales compared to the previous year. For 2025, the company plans to launch eight new car models, including EVs, with the expectation of surpassing last year's sales figures.

BMW, the No.2 luxury vehicle seller in India, also saw record sales, selling close to 16,000 vehicles, further underscoring the growing appetite for luxury cars in the country.