Luxury car manufacturer Mercedes-Benz India is cutting costs wherever possible to absorb cost escalation to remain competitive.

The German manufacturer has for some time been suffering decline in demand, mainly due to depreciation in the value of rupee.

Figures released by the Society of Indian Automobile Manufacturers (Siam), Mercedes-Benz India, the country's third-largest luxury car manufacturer, suffered a decline of around 24 per cent in sales to 1,633 units during April to July period, from 2,141 units in the corresponding period of previous year.

Peter Honegg, managing director and CEO of Mercedes-Benz India, said depreciation in the value of rupee had put a terrible impact on the manufacturer.

Speaking about their efforts to cut costs, Honegg said, "We are close to catastrophic mood means we are cutting costs wherever possible, our guys are flying economy class, we are going to cheaper hotels, we are cost cutting wherever possible."

Honegg explained that the company had to swallow 30 per cent of the price increase for every 2-3 per cent increase in depreciation of rupee against the euro.

Heavy price tags of Mercedes-Benz cars is also a big issue that analysts believe must be resolved to attract more customers to the brand. Cheaper products, in the range of Rs 20-22 lakh, are totally absent from the company's assortment.