Mercedes-Benz Faces Investor Concerns Over Luxury Strategy in China and India

Mercedes-Benz faces growing pressure from shareholders over its luxury-focused strategy in China and India. At the automaker's annual shareholders' meeting in Stuttgart, investors questioned whether the brand's approach aligns with changing consumer preferences in the world's largest car market. Mercedes-Benz, like BMW and Audi, has lost market share in China to domestic brands such as BYD, NIO, and Li Auto. These local competitors offer advanced technology and premium features at lower prices, challenging European incumbents.

Key Highlights

• Mercedes-Benz China sales fell 19 percent in 2025 and 27 percent in Q1 2026
• Investors warn luxury-first strategy may not meet Chinese consumer technology expectations
• BMW overtook Mercedes-Benz in India luxury car sales for Q1 2026

Investor Concerns and Sales Decline

Mercedes-Benz's China sales dropped 19% last year, reaching 552,000 vehicles. The decline accelerated to 27% in the first quarter of 2026. Investors raised concerns that the company's traditional luxury-first approach may not meet Chinese consumer expectations for technology and value. Moritz Kronenberger of Union Investment, which holds about $276 million in Mercedes-Benz stock, argued that the brand's strategy is becoming a liability. He criticized the practice of developing new products starting from the flagship S-Class, rather than focusing on mass-market models as Chinese rivals do.

Tanja Bauer of Deka Investment, with around $191 million invested in Mercedes-Benz, also warned of the risks of a narrow luxury focus. Both investors emphasized the need for a broader product strategy to regain competitiveness in China.

Company Response and Strategic Shifts

CEO Ola Källenius responded by outlining a major product and technology overhaul for China. Mercedes-Benz plans to launch seven new models by 2027 and introduce advanced driver assistance systems developed with Chinese technology firm Momenta. Källenius described this as the company's most ambitious initiative, supported by local development and partnerships. Finance chief Harald Wilhelm set a medium-term sales target of 500,000 to 600,000 vehicles annually in China, aiming to stabilize the brand's market position.

Competitive Pressures in India

Mercedes-Benz also faces challenges in India, where its luxury segment leadership is under threat. In the first quarter of 2026, BMW Group India surpassed Mercedes-Benz in quarterly luxury car sales for the first time in over a decade. BMW sold 4,944 units from January to March, compared to a combined 4,862 units for Mercedes-Benz India and Mercedes-Benz AG. This shift reflects different strategies: Mercedes-Benz has focused on higher-value models, with average selling prices nearing ₹1 crore, while BMW has targeted first-time luxury buyers with a broader and more accessible lineup, including the iX1 electric vehicle.

Despite these quarterly results, Mercedes-Benz retained its top position for the full financial year FY2026, selling 18,160 units compared to BMW's 17,301. However, the narrowing gap signals increasing competition and questions about the sustainability of Mercedes-Benz's premium-over-volume approach in key markets.