India-EU Free Trade Agreement: A Game Changer for Luxury Automotive Sector
The impending India-European Union Free Trade Agreement (FTA) represents a watershed moment for India's premium automotive landscape. This comprehensive trade pact promises to dramatically reshape market dynamics by making European luxury vehicles more accessible to Indian consumers through substantial tariff reductions.
Tariff Transformation: From 110% to 10%
Under the proposed India-EU FTA framework, India plans to implement a phased reduction of import duties on European Union-manufactured vehicles. The current steep 110% duty will be progressively lowered to approximately 30-35% upon implementation, expected by late 2026, before eventually reaching just 10% over the subsequent five-year period. This significant tariff reduction applies specifically to EU-built cars priced above €15,000 (approximately ₹16.40 lakh) and includes an annual import quota of 250,000 vehicles.
This strategic policy shift could fundamentally alter India's automotive import landscape, making premium European models considerably more affordable and competitive in the Indian market. The gradual implementation allows both manufacturers and consumers time to adapt to the changing market conditions while providing a structured pathway toward greater market liberalization.
Luxury Market: Small Segment with Substantial Potential
Despite the promising outlook, luxury vehicles currently represent a modest portion of India's overall automotive market. In 2025, luxury car sales were estimated at approximately 53,000 units, constituting just over 1% of India's total passenger vehicle volume of 41,53,432 units. This relatively small market share highlights both the current limitations and the substantial growth potential of India's premium automotive segment.
The India-EU FTA could serve as a powerful catalyst for expanding this niche market over the long term, particularly as premiumization trends gain momentum among India's growing affluent consumer base. The agreement's timing aligns with broader economic shifts and evolving consumer preferences toward higher-end automotive products.
Landmark Cars: Strategic Positioning in a Transforming Market
Within this evolving landscape, Landmark Cars emerges as a particularly well-positioned player to capitalize on the changing market dynamics. Following the FTA announcement, the company's share price surged by 15%, reflecting investor confidence in its strategic positioning within India's premium automotive retail ecosystem.
Diversified Portfolio with Strong European Exposure
Landmark Cars holds a distinctive position as India's leading premium automotive retail platform and the country's first publicly listed, multi-brand automobile retailer. Despite commanding just 0.5% volume share and 0.8% value share in the overall passenger vehicle market, the company maintains strategic partnerships with numerous original equipment manufacturers across both premium and luxury segments.
A crucial aspect of Landmark's business model is its significant exposure to European Union brands, including Mercedes-Benz, Volkswagen, Renault, and Citroën. Among these partnerships, Mercedes-Benz stands out as particularly influential, accounting for 39% of Landmark's total revenue in the first half of fiscal year 2026. This strong European brand alignment positions Landmark favorably to benefit from the tariff reductions facilitated by the India-EU FTA.
Operational Scale and Geographic Reach
Landmark Cars has established an impressive operational footprint across India, with 139 outlets comprising 75 sales showrooms and 64 workshops distributed across 29 cities in 12 states as of November 2025. The company has pursued an aggressive consolidation strategy within India's fragmented dealership landscape, with nearly one-quarter of its outlets added through strategic acquisitions.
Beyond its European partnerships, Landmark maintains collaborations with diverse automotive brands including Honda, Jeep, BYD, Kia, Mahindra & Mahindra, and MG Motor. The company serves as the largest retail partner in India for several prominent brands including Mercedes, Volkswagen, BYD, Honda, and Jeep, providing comprehensive coverage across both luxury and mass-market segments.
Business Model Dynamics: Agency versus Dealership Structures
Landmark Cars employs distinct operational models across its brand partnerships, creating a diversified business approach that balances revenue streams and risk exposure.
Mercedes-Benz Agency Model
For its Mercedes-Benz operations, Landmark functions under an agency model where customers place orders directly with Mercedes-Benz India. In this arrangement, Landmark acts as an intermediary agent, facilitating sales and delivery processes while earning commission on each transaction. This model results in lower reported revenue compared to traditional dealership structures but offers significant advantages including reduced inventory risk and lower working capital requirements.
Traditional Dealership Model
For other brand partnerships, Landmark operates under conventional dealership arrangements where the company purchases vehicles directly from manufacturers, maintains inventory, and sells to customers. Under this structure, Landmark recognizes the full invoice value of each vehicle as revenue, creating different financial dynamics compared to the agency model employed for Mercedes-Benz.
Financial Performance and Growth Trajectory
Revenue Composition and Growth
In H1FY26, Landmark's revenue mix demonstrated strong diversification with Mercedes contributing 39%, followed by BYD (10%), MG (9%), Volkswagen (8%), Honda (8%), and Mahindra & Mahindra (6%). Notably, newer partners including BYD, MG, M&M, and Kia are becoming increasingly significant contributors to the company's overall revenue stream.
BYD's performance has been particularly impressive, with volumes growing nearly threefold over the past year, reflecting rising consumer demand for electric vehicles within India's evolving automotive market.
Integrated Operating Model
Beyond new vehicle sales, Landmark maintains a comprehensive service portfolio including after-sales maintenance, pre-owned vehicle sales, and distribution of third-party finance and insurance products. This integrated approach enables the company to capture value across the entire vehicle ownership lifecycle while reducing dependence on cyclical new-vehicle sales.
Financial Metrics and Performance
New vehicle sales remain Landmark's largest revenue contributor, accounting for 79% of total revenue in Q2FY26 with reported segment revenue increasing 40.9% year-on-year to ₹956.8 crore. This growth was supported by a 14.7% increase in average selling price to ₹23.16 lakh, driven by favorable product mix toward higher-end models, particularly Mercedes-Benz vehicles.
After-sales services contributed ₹254 crore in Q2FY26, representing 10.9% year-on-year growth. This segment currently drives profitability with margins of 16.1%, though this represents a decline from 18.8% in Q2FY25. In comparison, new vehicle sales maintained margins of just 1.4%.
At the consolidated level, revenue grew 33.5% year-on-year to ₹1,211 crore in Q2FY26. EBITDA increased by 8% to ₹59.2 crore, though margins moderated to 4.9% from 6.0% in the corresponding period last year. This margin compression resulted partly from stock liquidation following GST rate reductions and slower ramp-up of newly established outlets.
Strategic Outlook and Market Positioning
Expansion and Operational Efficiency
Landmark Cars has demonstrated disciplined inventory management with inventory days of 38, significantly below the industry average of 60 days, reflecting efficient sales conversion processes. The company generated positive operating cash flows of ₹177 crore in H1FY26 despite aggressive expansion initiatives.
The company opened 23 new outlets in FY25, many of which are yet to reach break-even status. Management anticipates these recently established locations will achieve profitability by the end of FY26 as operational efficiency improves. Current strategic focus has shifted toward stabilizing and optimizing recently opened outlets rather than pursuing additional organic expansion.
Market Catalysts and Growth Drivers
Several factors support Landmark's growth trajectory, including GST rate reductions and potential interest rate cuts that could stimulate automotive demand. October 2025 vehicle registrations grew at double-digit rates, approaching 5.5 lakh vehicles, while November enquiry levels exceeded previous year figures by approximately 20%.
Long-term growth prospects are further supported by expansion plans from key manufacturing partners. Honda has outlined ambitious plans to increase volumes fivefold over the next five years through the launch of 10 new models by 2030. Mercedes-Benz is preparing for comprehensive product rollouts beginning in 2026, while Renault plans to re-enter the SUV segment with the recently launched Duster model.
Valuation and Risk Considerations
At a current price of ₹395, Landmark Cars trades at an EV/EBITDA multiple of 9.5, representing a discount compared to smaller peer Popular Vehicles at 12.1. However, Landmark's profitability has demonstrated cyclical variability, with margins fluctuating across market cycles. Improving profitability through enhanced operational execution and better leverage remains a critical focus area for the company.
The inherent cyclicality of the automotive sector represents a persistent risk factor, though Landmark's diversified business model and integrated service offerings provide some insulation against market fluctuations. The company aims to double its market share over the medium term through balanced organic and inorganic growth strategies, with the India-EU FTA potentially playing a decisive role in facilitating this expansion.
The India-EU Free Trade Agreement represents more than just tariff reductions—it symbolizes a fundamental shift in India's approach to premium automotive imports. For companies like Landmark Cars with strategic European brand alignments, particularly with Mercedes-Benz, this agreement could unlock substantial growth opportunities within India's evolving luxury automotive landscape.
