Mercedes-Benz India reported its highest-ever monthly sales in September 2025, with retail volumes growing 36% year-over-year, driven primarily by the government’s GST 2.0 reforms that reduced tax rates on luxury vehicles and coincided with the festive buying season.
The German automaker retailed over 2,500 units during the nine-day Navratri festival period alone, marking the company’s strongest festive sales performance in India. The surge comes after the implementation of new GST rates on September 22, which reduced the total tax burden on luxury cars from 45-50% to a flat 40%.
September Performance Highlights
The record September sales were led by several models posting their best-ever monthly numbers, including the long-wheelbase E-Class sedan and the GLC, GLE, GLS, and AMG G63 SUVs. The company’s managing director and CEO, Santosh Iyer, attributed the strong performance to pent-up demand that had been building since mid-August, when customers began holding off purchases in anticipation of the GST changes.
“Mercedes-Benz clocked its best-ever September sales owing to an overwhelming customer response following the GST 2.0 reforms, culminating the pent-up demand,” Iyer said in a statement. He added that the company’s “Dream Days” campaign, which offered innovative financing programs, contributed to the surge in demand.
Half-Year Numbers Show Modest Growth
While September’s performance was exceptional, the broader picture reveals more measured growth. For the first half of fiscal year 2025-26 (April through September), Mercedes-Benz India sold 9,357 units, representing 4% growth compared to the same period last year.
The second quarter (July-September) recorded 5,119 units, the company’s best-ever Q2 performance. However, this follows a pattern of strong top-end luxury sales offsetting weakness in the entry-luxury segment, which declined during the period.
Context: Earlier Warnings of Flat Year
The September surge represents a significant turnaround from the cautious outlook company leadership had expressed earlier in 2025. In July, Iyer told media outlets he expected full-year sales to remain “flat-ish or single-digit growth,” citing geopolitical uncertainties and macroeconomic pressures.
In June, the company had projected full-year performance would fall within a “-1% to +3% corridor,” dependent on festive season demand and base effects from the prior year. The luxury carmaker had also implemented two rounds of price increases earlier in the year due to a 12% depreciation of the rupee against the euro, with hikes announced for June and September.
Those price increases ranged from Rs 90,000 for entry models to Rs 12.2 lakh for high-end variants like the Mercedes-Maybach S 680. However, the GST reforms reversed course, with the company passing on price reductions of Rs 5-11 lakh across its lineup following the September 22 tax changes.
Segment Performance
The top-end luxury segment showed resilience, with 25% penetration of total sales and 12% year-over-year growth in Q2. Models in this category—including the GLS, S-Class, Mercedes-Maybach, and AMG G63—benefited from growing interest in hyper-personalization, with 75% of top-end vehicles featuring the company’s bespoke “manufaktur” customization options. The AMG G63 maintained a waiting period exceeding six months despite recording its highest-ever monthly sales.
The core segment, comprising 60% of sales, grew 10% in Q2, led by the long-wheelbase E-Class, which the company claims is India’s best-selling luxury car with 47% year-over-year growth during the quarter.
The entry-luxury segment—consisting of the A-Class sedan and GLA SUV—declined during the period, with the company noting this segment faced intense competition from lower-priced alternatives with aggressive market offers.
Battery electric vehicles maintained 8% penetration of total sales, growing 10% overall, with the EQS SUV posting record monthly sales. The G 580 Edition 1 with EQ Technology sold out for the year, with bookings now open for future delivery slots.
Cautious Optimism Ahead
Despite the September momentum, Iyer struck a measured tone about the remainder of the year. While expressing confidence that festive buying would continue through October with Dhanteras and Diwali approaching, he acknowledged ongoing challenges including adverse foreign exchange movements and rising operational costs.
“The reduction in the GST rates has certainly improved customer sentiment with its appropriate timing; as car prices are increasing owing to macro-economic challenges like adverse forex movement, rising operational cost etc,” Iyer said. “We hope this buoyant spirit sustains for the remaining festive season, as we continue to observe market trends closely, remaining cautiously optimistic.”
The company’s statement emphasized that while there was strong demand across the portfolio, management continues to monitor macroeconomic factors that could affect sustained growth beyond the immediate festive period.
Whether the GST-driven September surge translates into full-year growth exceeding the earlier flat-to-low-single-digit projections will depend largely on demand during the crucial October-December quarter, traditionally a strong period for luxury car sales in India.