Mercedes-Benz India to hike prices in September; marks third increase this year - key reasons behind

NEW DELHI: Mercedes-Benz India is set to increase vehicle prices by 1–1.5% in September to offset the impact of the weakening rupee against the euro, Managing Director and CEO Santosh Iyer said."There is another price hike coming up in September, because of the euro. If you see, the last one month has remained at the 100 mark (INR), and that has not changed. Therefore, we will have to undertake an increase as well in September," Iyer told PTI.The company, which leads India’s luxury car market, has already raised prices twice this year, in January and July and the upcoming adjustment is anticipated to be between 1-1.5%.Regarding sales impact concerns, Iyer explained that reduced interest rates are helping to maintain balanced monthly EMIs for purchasers. The company reports that 80% of their new vehicles are purchased through financing options."So, when you look at the EMIs, we have tried to keep the same, though the price of the car has gone up. So, that helps us to mitigate the impact of price increase to a large extent," Iyer said.He expressed confidence in continued market demand, citing economic growth as a driver for luxury car purchases. He noted that customers understand price adjustments are necessary due to currency fluctuations.Addressing supply chain concerns, particularly regarding rare earth magnets, Iyer stated: "If you look at the supply chain, as far as we are concerned, we are not affected yet by any of these topics, because we are managing it well. We also have sufficient stocks with us, so we are able to navigate and manage it"."I think our colleagues back in Stuttgart (Germany) have managed it well, so we don't have any issues there," he added.Iyer acknowledged that the company’s growth may remain flat this year due to ongoing geopolitical tensions and other challenges. While the overall passenger vehicle market is growing at a modest 2-3%, the luxury car segment has seen slightly better growth at around 5-6%."Of course, one would love much higher growth rates, but considering what's happening worldwide geopolitically, I think growth in the automotive industry by itself is a positive sign as such," Iyer said.