And Volkswagen's luxury brand Audi reported it had sold nearly 1.9 million vehicles in 2016, up 3.8 percent on the previous year.
The Indian subsidiary of the German brand will bounce back and is expecting to achieve a double-digit growth this year.
The Supreme Court ban on diesel vehicles above 2000cc as well recent the demonetisation has resulted in a marginal impact on the annual sales of luxury auto major Mercedes-Benz in 2016, while its competitor BMW India saw a 14% growth from its lower base. However, market sources say the company may have sold about 10,000 units. Of course, the slight drop in sales can be attributed to the various factors. The sales decline was mainly due to the impact of diesel ban in the Delhi-NCR region. This was the first time Mercedes-Benz sold more than 2 million vehicles. Speaking on the 2016 sales, Roland Folger, Managing Director & CEO, Mercedes-Benz India said, "2016 was a year of market challenges but despite facing such challenges, it is quite satisfying for us to have made the best of the opportunities that we had".
BMW's growth fell short of Mercedes in China and Europe and it shrank faster in the United States, at 9.7 percent for its BMW and Mini cars combined.
Rivals BMW on the other hand saw a 14 percent growth in sales as compared to previous year. The luxury brand carmaker ended up into the third position.
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The year 2016 wasn't confidence inspiring for the entire automobile industry. "Despite a challenging business environment, we managed to increase sales and market share".
2016 saw the automaker leave no stone unturned having announced 13 vehicle launches through 12 months. Volvo sales were up by about 15 percent to just under 1600 units in 2016. It also delivered the most cars in the premium segment, according to the company. In 2017, Mercedes-Benz will also undertake the next phase of initiatives in the after-sales domain with new innovations in the pipeline planned, including the roll-out of "My Mercedes, My Service 2.0" amongst other initiatives. Currently, Jeep sells the Wrangler and the Grand Cherokee in India including the V8 6.4-litre Hemi powered Grand Cherokee SRT.
Mercedes' strongest growth market came from China, with sales spiking by 26,6% over the year, followed by Europe at 12,4%. Jaguar's official Indian sales figures haven't been released yet.
The Mercedes-AMG and smart brands also had a successful year in 2016, with sales growth of 40.1 percent and 21 percent, respectively, it added. The Ingolstadt based carmaker launched several new products this year including the flagship R8 V10 supercar in India.