India Luxury Car Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Luxury Car Market Trends and Insights

Premiumization of Upper-middle-class Households

India now has an estimated 8.71 lakh millionaire households (defined as households with a net worth of INR 8.7 crore or more), marking a 90 % increase compared with 2021 (from about INR 4.58 lakh). These affluent households represent roughly 0.31 % of all Indian households and reflect strong wealth creation in the country amid economic growth^{[1]Rishi Kant, "India has 8.71 lakh millionaire households, up 90% from 2021: Mercedes-Benz Hurun India Wealth Report 2025," Fortune India, fortuneindia.com} . Nuclear families now account for 62% of luxury purchases, up from 48% in 2020, as dual-income couples increasingly favor personal mobility. Liquidity is evident in UPI transfers above INR 1 lakh, which have surged 34% year-over-year. Slowing real-estate appreciation redirects status signaling toward automobile ownership.

Rising Availability of Entry-level Models (CKD)

Local assembly cut the entry point for German sedans to INR 48.9 lakh, with BMW’s X1 sDrive18i M Sport priced INR 6.5 lakh lower than the prior CBU version. CKD economics avoids 100% CBU duties, preserves 28-32% gross margins, and trims delivery lead times to six weeks. Mercedes-Benz sold 19,565 units in India in 2024^{[2]Ketan Thakkar, "Mercedes-Benz sells a record 19,565 units in India in 2024," AUTOCAR professional, autocarpro. in}. Audi’s Aurangabad plant will accommodate BEV platforms by late 2026, extending CKD savings to electric models below INR 80 lakh.

EV Incentives by State Governments

Karnataka waives road tax and registration fees, saving INR 8-12 lakh on an INR 1 crore luxury EV, while Tamil Nadu refunds 100% of state GST for five years on locally assembled EVs^[3]. These benefits stack on top of the federal PM E-DRIVE fund. Cross-state registration arbitrage has emerged, prompting Maharashtra to cap subsidies and mandate three-year in-state registration, which is expected to reduce new EV sales in the coming years.

Rapid Rollout of 150 kW+ Public DC Chargers on Inter-city Corridors

National guidelines require a 150 kW charger every 100 km; 1,200 were live by December 2025, with clusters on the Bangalore-Chennai, Mumbai-Pune, and Delhi-Jaipur routes. Fast charging now restores 10-80% of the battery in roughly 22 minutes, lowering the per-kilometer energy cost by 72% compared to petrol. Corporate chauffeur fleets exploit the shorter downtime, yet voltage sags have necessitated power throttling during peak hours on the Mumbai-Pune corridor.

Scarcity of Trained Technicians for ADAS and High-Voltage Systems

The Automotive Skills Development Council estimates a 2.4 million technician shortfall by 2026, with only 50,000 of the 500,000 required EV-certified technicians currently available, resulting in a 10% fill rate. This shortfall extends warranty-claim resolution from 4 days in metros to 18 days in tier-2 cities like Coimbatore and Jaipur. The skills gap manifests in customer dissatisfaction; a 2024 J.D. Power study found that 42% of luxury EV owners in tier-2 markets rated aftersales service below expectations, citing technician unfamiliarity with battery thermal management diagnostics and over-the-air software updates, factors that depress brand Net Promoter Scores by 18 points relative to metro areas. 

Slow Build-out of Certified Pre-owned Luxury Networks

The certified pre-owned segment is advancing but lacks scale, particularly outside the top ten metropolitan areas, which constrains trade-in liquidity and suppresses upgrade cycles. Audi plans to expand its pre-owned showrooms to 30 by 2025; however, coverage gaps persist in emerging wealth hubs such as Indore, Kochi, and Jaipur. Without brand-backed refurbishment, financing, and warranty frameworks, affluent buyers remain wary of secondary transactions, dampening the resale value that underpins new-car purchase decisions. The organized expansion of certified networks is therefore critical to sustaining higher absorption rates for new inventory.

Segment Analysis

By Vehicle Type: SUVs Dominate Despite Sedan Revival

Sport Utility Vehicles (SUVs) captured 47.43% of India's luxury car market share in 2025, while sedans are expected to resurge with a forecasted 10.12% CAGR through 2031. Rear-seat entertainment uptake exceeds two-thirds, indicating a change of value toward ride quality. SUVs remain indispensable in tier-2 markets with poor road surfaces; the ultra-luxury SUV niche, priced above INR 2 crore, is advancing on the back of models like the Rolls-Royce Cullinan.
Hatchbacks remain a negligible segment, constrained by the absence of premium offerings priced below INR 40 lakh (approximately USD 479,000). The discontinuation of the Mercedes A-Class in 2023 left a void that no competitor has filled, ceding the entry-luxury space to mass-premium brands like the Skoda Octavia. Hybrid powertrains further propel the sedan revival—BMW's 530e and Mercedes E 300e—which benefit from the September 2025 GST reduction to 38%, trimming prices by INR 9-11 lakh (USD 108,000-132,000) and compressing the premium over equivalent petrol variants to just INR 4 lakh (USD 48,000), a gap that buyers recover within 60,000 kilometers given petrol prices averaging INR 105 per liter (USD 1.26) in metros.

Note: Segment shares of all individual segments available upon report purchase

By Drive Type: ICE Dominance Faces EV Disruption

Internal combustion engines still held 74.68% of India's luxury car market share in 2025; however, BEVs are expected to expand at a 21.98% CAGR through 2031, thereby quadrupling the overall pace of the Indian luxury car market. Mercedes-Benz EQS SUV buyers can leverage a 40% first-year depreciation under India’s tax code, thereby narrowing the payback horizon. Plug-in hybrids gained momentum from the September 2025 GST cut to 38%, resulting in a 28% surge in month-on-month registrations. Residual-value anxiety keeps some buyers in petrol variants, where refueling convenience and lower sticker prices remain essential considerations.
The ICE segment's resilience stems from three factors: established refueling infrastructure (85,000 petrol pumps versus 12,000 public EV chargers), faster refueling (3 minutes versus 25 minutes for fast-charging), and lower upfront cost—the BMW 530i at INR 72.9 lakh (USD 873,000) undercuts the i4 eDrive40 by INR 18 lakh (USD 216,000), a gap that buyers with annual mileage under 15,000 kilometers cannot justify. However, the September 2025 GST reform, which reduced hybrid rates to 38%, has catalyzed a 28% month-on-month surge in plug-in hybrid registrations. The BMW 530e and Mercedes E 300e are leading the uptake in Bangalore and Pune, cities where buyers prioritize tax efficiency over outright performance.

By Price Range: Mid-luxury Segment Drives Growth

The INR 50 to 80 lakh band captured 40.87% of the Indian luxury car market size in 2025 and is expected to rise at a 10.36% CAGR through 2031, driven by CKD hybrids such as the BMW 530e and Mercedes E 300e. Banks extend up to 85% loan-to-value on this tier, easing down-payment hurdles for 4.2 million eligible households. The ultra-luxury tier, above INR 80 lakh, is smaller but posts strong growth, propelled by bespoke sports cars such as Lamborghini’s Revuelto plug-in hybrid.

This bracket benefits from the September 2025 GST reform that reduced hybrid rates to 38%, trimming sticker prices by INR 8-11 lakh (USD 96,000-132,000) and pulling the BMW 530e (INR 74.5 lakh / USD 892,000) and Mercedes E 300e (INR 78.5 lakh / USD 940,000) within reach of buyers previously capped at INR 70 lakh (USD 838,000) budgets.

Note: Segment shares of all individual segments available upon report purchase

By Sales Channel: Digital Transformation Accelerates

Dealerships still accounted for 67.82% of India's luxury car market share in 2025, yet OEM-operated web portals are projected to scale at a 14.62% CAGR through 2031. End-to-end online transactions compress delivery cycles by three weeks and remove 8-12% dealer markups. Trade-in friction persists; algorithmic valuations run 8-12% below physical appraisals, prompting many buyers to finalize the deal at showrooms. OEM-run service centers in metros preserve 28-32% after-sales margins and help migrate the customer base online.

The online channel's appeal extends beyond convenience; digital platforms offer transparency in pricing—eliminating the 8-12% dealer markup that franchise showrooms layer onto manufacturer-suggested retail prices—and enable side-by-side comparisons of financing options from 6-8 lenders, a feature that reduces effective interest rates by 40-60 basis points.

Geography Analysis

West India retained a 32.94% of the Indian luxury car market share in 2025, whereas South India is poised to log the highest 11.27% CAGR through 2031. West India’s dominance stems from Mumbai’s 18,000 ultra-high-net-worth residents and Pune’s OEM cluster, which reduces delivery times to as low as four weeks. Yet saturation looms as luxury penetration nears five vehicles per 1,000 households. 

South India benefits from Karnataka’s tax waivers and Tamil Nadu’s GST reimbursement, yielding upfront savings of INR 8-12 lakh per luxury EV and compressing seven-year ownership costs by 18%. 

North India, anchored by the Delhi NCR region, faces headwinds from stricter pollution controls and odd-even restrictions. SUVs dominate here due to flood-prone roads, while East and Northeast India remain under-penetrated at 6.5%, constrained by sparse dealer networks and only 200 fast chargers across eight states.