The German luxury car manufacturer Mercedes-Benz sees potential in India to become a production and export center for global markets. The company's global head, Ola Kellenius, stated that the question is not whether this will happen, but when.
However, the company has not yet made a final decision to manufacture cars in India for subsequent export. In the short term, the main opportunity is expanding global supply of components and technologies from this country.
Market Development Forecasts
Kellenius, Chairman of the Board of Directors of Mercedes-Benz Group AG, noted that the growing luxury car market in India, the development of the supplier ecosystem, and engineering capabilities could eventually provide the country with a more significant manufacturing role. He emphasized: 'I think it is more a matter of time than possibility. But I want to clarify that we have not made such a decision at the moment,' Kellenius said at a media roundtable at the company's plant in Chakan, near Pune, on Wednesday.
These statements came after Maharashtra Minister Devendra Fadnavis invited Mercedes-Benz to use the state not only as a production site for the domestic Indian market but also as a base for developing technologies and producing vehicles for global markets.
Previously, the Chakan plant was used for limited vehicle exports. In 2018, a small batch of locally produced GLC SUVs was sent there to meet US demand as a backup option. Nevertheless, the plant is primarily focused on the Indian market. In the presentation of the company's global strategy in February 2026, priorities for foreign markets, including India, were named as expanding regional supply and service centers, as well as more active use of trade agreements.
Kellenius also noted that India is already an important growth market, as Mercedes-Benz showed its best quarterly result in the country. This optimism is based on Mercedes-Benz's strongest quarterly performance in India. From July to September 2026, the company sold 5,422 vehicles, which is 6 percent more than the previous year and 17 percent compared to the previous quarter. From January to September, sales grew by 8 percent, reaching a record 15,190 units, driven by demand across core, premium, and entry-level luxury segments.
Nevertheless, the luxury car segment remains relatively small compared to the overall passenger car market. About 5 million passenger cars are sold in India annually, but the premium and luxury segments account for just over 1 percent, or approximately 60,000 vehicles. Mercedes-Benz's annual sales, amounting to about 20,000 vehicles, give it a market share of approximately one-third.
Based on India's projected economic growth over the next five to seven years, Kellenius expects a significant increase in demand for luxury vehicles. A larger domestic market, combined with appropriate product positioning and pricing, could ultimately justify the next step in local manufacturing.
Until now, India may play a more significant role in Mercedes-Benz's global supply chain. 'We can, if you like, export from India based on components before asking about the full car,' he stated.
The company is already strengthening technology and supplier partnerships in India, which, according to Kellenius, do not necessarily have to be limited to serving the domestic market. A proposed free trade agreement between India and the European Union could further improve the economy of cross-border production and supply. He described this agreement as good news for India, Europe, and business, noting: 'If friction is less, the probability of an export deal is higher.'
Calls for Development
Fadnavis, who recalled the opening of the same plant expansion in 2015, urged the German automaker to think beyond just assembling cars. He appealed to Mercedes-Benz to consider Maharashtra not only as a place for production in India but also as a platform for developing next-generation battery technologies, automotive artificial intelligence, electronics, and software. The minister stated that the state's ambition is to transition from a center of automotive production to a global center for future mobility.
Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, reported that the company's cumulative investment in the country has reached 320 billion rupees, including 200 billion rupees invested in 2026 in production operations, new product implementation, and digitalization. In his statement, Iyer emphasized: 'The presence of senior officials and the Board of Trustees and the Board of Directors of Mercedes-Benz in India underscores the importance of India as a strategic market for Mercedes-Benz.'
Since commencing operations, Mercedes-Benz has sold over 240,000 vehicles in India, most of which are manufactured locally in Chakan.
India's Rise in the Global Hierarchy
The growing importance of India comes against the backdrop of intense competitive pressure that Mercedes-Benz faces in China, which has historically been one of the largest and most profitable markets for the company. Global sales of the German manufacturer's passenger cars decreased by approximately 8 percent in the third quarter of 2026.
When asked whether the slowdown in China would lead to a revision of the company's global strategy and an increased importance of India, Kellenius replied that China would remain a key pillar despite the difficulties. He stated: 'Despite the cyclical development of the Chinese market and competitive intensity, it remains the largest automotive market. Therefore, it will continue to be a pillar in our strategy.'
However, the growth of India's role is not an 'either/or' choice. 'It is not a choice between two options. It is both,' he added, clarifying that India's position in Mercedes-Benz's global hierarchy will grow over the next five years.
Kellenius characterized India as a growth market, a talent market, a technology market, and a supply base; all these aspects will become more important in the company's global operations.
A significant part of this expansion will be carried out through Mercedes-Benz Research and Development India (MBRDI)—the company's largest R&D center outside Germany. Kellenius recalled that engineering activities in India began three decades ago, and since then, these relationships have evolved into what Mercedes-Benz calls globally integrated R&D, where Indian teams develop competencies in mechanical engineering, electronics, powertrains, software, and artificial intelligence. He cited a meeting with an Indian quantum computing startup collaborating with Mercedes-Benz as evidence of the complex technological capabilities available in the country. He also noted that Indian research operations are increasingly working on par with engineering centers in Germany and elsewhere.
Dr. Jörg Burzer, Technical Director for Development and Procurement at Mercedes-Benz Group AG, stated that Indian engineers contribute to the technologies shaping the company's global future.
EV Share Could Reach 20% by 2027
Kellenius also expects electric vehicles to constitute a significantly larger share of Mercedes-Benz sales in India in 2027, potentially reaching a range of 20 percent, compared to the high single digit expected this year. He said: 'In India this year we might finish with a high single digit of electric vehicles. I think next year it will be a double digit number, probably starting with a two.'
This optimism is linked to the expansion of the second-generation EV portfolio, including the locally produced electric GLC, which rolled off the assembly line in Chakan on Wednesday. Kellenius reported that Mercedes-Benz received about 1,000 pre-orders for the electric model even before customers learned its price, which he viewed as a sign of changing consumer preferences. The company separately announced that the electric GLC received over 550 expressions of interest in the first 36 hours after registration opened. On Wednesday, Mercedes-Benz launched a locally produced electric GLC 400 4MATIC at a price of 78.50 lakh rupees (excluding taxes) at the Chakan plant. This SUV has a claimed range of up to 711 km, and deliveries will begin in mid-November.
Mercedes-Benz intends to offer an electric alternative in every major passenger car segment by the end of the decade. However, Kellenius noted that full electrification in global markets is still far off. 'The internal combustion engine will exist for at least another 10, maybe 15 years,' he added, noting that diesel engines will remain part of the company's portfolio in the foreseeable future.
