As the G-Class tilts to an alarming 35-degree angle sideways, Santosh Iyer firmly holds the steering wheel, his expression as calm as if he were navigating a boardroom. “I trust this iconic SUV,” says Iyer, the MD & CEO of Mercedes-Benz India. “It can safely drive on a lateral slope (embankment where the car is tilted to one side) of up to 35 degrees without the risk of tipping over. It’s automotive engineering at its best.”
The word ‘best’ reminds me of the slogan ‘Das Beste oder Nichts’, or ‘The Best or Nothing’ – the guiding philosophy of Mercedes-Benz. “It’s not just a marketing phrase, but the core principle that represents our commitment to excellence,” Iyer says, as his G-Wagen – short for Geländewagen, or a cross-country vehicle – faces a pond with more than 2 feet of water. Smiling, he says: “The good news is that the G-Wagen has water-fording depth of 700 mm (2.3 feet).”
Good news on GST front
He shares another good news – luxury cars have become more affordable after the recent GST 2.0 reforms. “High-end cars were taxed more than 50% – 28% GST plus 15-22% cess plus local taxes,” he says. “With the new GST rate of flat 40% applicable on most luxury cars, price drops are to the tune of a couple of lakh rupees on the entry-level A-Class, to a whopping more than Rs 20 lakh on this G-Class we’re driving.”
But more than price drop, he says the bigger change will be the trickle-down impact of these reforms on the broader economy. “The overall reduction in GST will help consumers to have more money in their pocket, and that means better consumption, better affordability of EMIs, better opportunity to upgrade,” he says, suggesting that this will benefit the luxury segment indirectly.
Wealthier Indians
The Mercedes-Benz Hurun India Wealth Report 2025, released last week, highlighted that there is a significant increase in dollar millionaire households (net worth more than Rs 8.5 crore) in the country – rising 90% from 458,000 households in 2021 to 871,700 in 2025. “India’s growth story underscores the resilience of the economy, driven by a burgeoning domestic market and soaring aspiration of today’s young generation,” he says. “We’re happy to be a symbol of social prestige, financial affluence, and unmatched desirability.”
Best year ever
But despite this unmatched desirability, despite the number of millionaires rising, despite the GST rate cut, Iyer says it’s difficult that 2025 will be the best-ever year for luxury cars in India.
“For us, the first quarter sales of this year were lower than last year’s, then we had a strong second quarter, followed by a mixed third quarter. August sales were low due to the anticipation of September GST cut,” he says. “It’s difficult for the October-December quarter to overcorrect the January to September period. I expect 2025 sales to be close to last year levels, maybe slightly lower.”
Impact of heavy rainfall
As our G-Class drives out of the pond, having created a watery mess, I ask him if the extremely heavy rainfall this year could negatively impact car sales? “As long as there is 6.3% GDP growth, car sales will remain in positive territory,” he says. “Seasonal variations cause short-term impacts, but the overall economic growth is the key driver.”
FTAs driving economies
India has been pursuing a multipronged trade strategy, engaging in negotiations for free trade agreements (FTAs) with several countries/blocs. Iyer says that while they are beneficial for the economy, their direct impact on Mercedes-Benz India’s sales is limited. “We produce more than 90% of the cars we sell in India,” he says, noting that these cars are already subject to low taxes and would not be affected by FTAs.
Electric cars
Mercedes-Benz was the first luxury carmaker to start assembling EVs in India, back in 2022, and yet it isn’t the market leader in luxury EV sales – BMW India is the leader. Iyer says that the focus is on value over volume. “While competitors might focus on entry-level EVs to boost sales numbers, we’ve chosen to localise top-end models like the EQS sedan and SUV,” he says. “If we were so focused on volume, we would have done an entry-level EV, like some of our competitors have done.”
Back to the G-Wagen
Mercedes-Benz will add more models to its made-in-India portfolio, but the G-Wagen is unlikely to be produced in Pune, ever. “It’s made at a single location, in Graz, Austria – where we’re driving it – and is exclusively hand-built for Mercedes-Benz by contract manufacturer Magna Steyr,” he says.
As we’re about to finish our off-road trail – I’m a bit shaky after all that left-right movement – Iyer says that the G-Wagen, available in India as an electric (Rs 3.1 crore) and as petrol AMG G 63 (Rs 3.85 crore), is broadening its appeal. “Even though its price point makes it an aspirational car for the superrich, it isn’t solely for celebrities and athletes,” he says. “I already know a couple of CXOs who have bought the G-Wagon … in place of the supremely comfortable S-Class as well.”