Mercedes-Benz may have to raise prices in India because of the weakening rupee, which declined by more than 10% in the past month to trade at an all-time low of 60 against the US dollar.
If it raises prices it will be the latest in a line of OEMs who have increased car prices in India due to cost pressures.
Mercedes Benz India managing director and CEO Eberhard H Kern told PTI, "The rupee lost around 10% since last month against the euro and the dollar. For the time being we are safe. We follow a long-term hedging strategy. But if the rupee stays at this weak level, we have to look at our pricing... If you import your kits, parts or cars in euros or dollars and sell in rupees, there is pressure on pricing. Hedging does not last forever."
Kern also said the automaker intended to invest in expansion of its manufacturing plant at Chakan, Pune.
"We are investing an additional INR2.5bn (US$41.9m) into our production facility to double the capacity by next year. Today we have a capacity of 10,000 units a year, and from next year the available capacity will be 20,000 units," he said.
"[High interest rates are] hurting the overall auto industry, [but] Mercedes Benz belongs to a different class and will not [be affected]," added Kern.