Diesel Demand, EV Stability, and the E450: Market Insights from Santosh Iyer, Mercedes-Benz India

The E-Class has always been the mainstay of your portfolio. With the new E450 also being a driver’s car, are more customers reaching for the keys themselves?

Absolutely! The demand for the 450 specifically has been surprising – it’s nearly a 60:40 split between the E200 and the E450. Even the older generation of customers want to get behind the wheel now. The E450 ticks all the boxes, because it offers the perfect mix – it’s amazing behind the wheel but remains supremely comfortable in the backseat as well. It’s the sign of an evolving market where the price delta isn’t a barrier to engine class or size – customers simply want the best option available.

Diesel still makes up a large chunk of your sales and is expected to rise further following the GST revision. How difficult is it to plan the engine mix in such a dynamic environment?

It is definitely challenging. We honestly thought diesel demand would decline, yet it remains close to 40% of our total sales. With the recent GST adjustments offering Total Cost of Ownership (TCO) advantages, demand has surged even further. We have to be technology-agnostic – we have diesel, gasoline, and electric options. The key is agility. We need to plan with resilience, because fluctuations in policy or geopolitical issues can shift market sentiment and dynamics instantly. If we didn’t have the stock prepared for the recent rally, we would have missed capturing this market opportunity.

There is a sense that German manufacturers are going back to their heritage to differentiate themselves from new competitors. Do you agree?

You have to go back to your strengths. The German auto industry is known for cars that make you feel good and invoke a sense of passion. We decided to return to our core when it comes to styling, with iconic, timeless design. On the other hand, we are focusing on software-defined cars. It’s a combination of returning to iconic design while integrating cutting-edge technology and a superior user experience that sets the benchmark. If we don’t offer that unique experience, we will lose our distinct positioning.

EV sales as a percentage of the total industry have dipped recently. Does the government need to do more to push EVs?

The government has done its bit with a 5% GST rate compared to the much higher rates for combustion engines. For us, EV penetration is stable at around 9-10%. However, adoption depends heavily on value and the stability of the ecosystem. We have seen that any change in state-level taxation or incentives drastically alters the TCO equation. Factors like residual value and acquisition cost also create distortions. If the value proposition distorts, customer preference shifts immediately.

You recently released the Mercedes-Benz-Hurun Wealth Report. What was the rationale behind that?

In the last 30 years, we’ve sold around 2,00,000 cars. From 2014 to 2024, our growth correlated perfectly with India’s GDP growth. This index helps coordinate where Mercedes-Benz can grow next. It’s about mapping the rising wealth in India to potential market expansion and ensuring we are present where wealth is migrating.

Finally, what can we expect from Mercedes-Benz in 2026?

We always challenge the status quo. To stay on the volume side of the spectrum, we have to innovate and not just look at the money. Next year, we will continue our product offensive. While some models are currently unavailable due to global supply constraints, we expect to get them in the first quarter of next year. We will be busy with new products and initiatives designed to create value for the customer.