Mercedes-Benz (OTC:MBGYY) plans to expand its presence in India with 20 new outlets in 2025, focusing on smaller cities where young, affluent entrepreneurs are driving demand for luxury goods.

This marks a cultural shift among India’s younger generations, who are moving away from the thrift-focused mindset of their predecessors to embrace indulgence in premium products.

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Mercedes has observed higher demand for premium and electric vehicles in cities like Kanpur and Patna, where infrastructure like stand-alone homes supports easier EV charging. The company plans to expand its service centers in such areas after achieving record 2023 sales of 19,500 vehicles—a 12% increase—driven by strong EV sales, which nearly doubled.

Despite this growth in smaller cities, major urban centers like Mumbai and Delhi still dominate, accounting for 80% of Mercedes’ total sales, with luxury cars capturing a 2-3% market share. In smaller towns, luxury vehicles represent just 1.1% of the market, indicating significant room for growth.

“Top-end cars continue to grow and outgrow entry and core segments also. These are promising signs on the changing structure of the market,” Iyer added.

Price Action: Mercedes-Benz shares closed 2.07% lower at $13.73 on Wednesday.

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