India Luxury Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The India Luxury Car Market is Segmented by Vehicle Type (Hatchback, Sedan, and SUV), Drive Type (IC Engine and Electric), and Price Range (INR 20 Lakh – 50 Lakh, INR 50 Lakh – 80 Lakh, and Above INR 80 Lakh). The report offers market size and forecast on the Indian luxury car market in value (USD billion) for all the segmentations mentioned above.

Market Snapshot

India Luxury Car Market Overview
Study Period: 2018 - 2026
Base Year: 2020
CAGR: >6 %

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Market Overview

The Indian luxury car market studied was valued at more than USD 1 billion in 2020, and it is expected to reach a value of over USD 2 billion by 2026, registering a CAGR of more than 6% during the forecast period.

With the spread of COVID-19, the sales of luxury cars were affected due to lower footfalls in the showrooms. Various automobile manufacturers were forced to temporarily shut their production as the supply chain was disrupted by the country-wide lockdown imposed by the government, which restrained the market growth.

India is a huge market for vehicles and poses a very high potential for luxury cars. Although the penetration level of the Indian luxury car market is low, leading luxury car manufacturers are betting on the market’s potential.

As luxury car manufacturers are launching multiple models with various price ranges, along with user-friendly financing schemes, the demand for luxury cars is expected to rise in the country. Moreover, the demand for luxury SUVs has been growing rapidly in the country and is expected to continue during the forecast period, as they offer extra space and comfort. Major luxury car manufacturers, like Audi, BMW, and Mercedes are planning to launch new luxury models in the country at a competitive price.

Scope of the Report

The Indian luxury car market covers all the latest R&D initiatives. Investments are made by the government and vehicle manufacturers across the country. The report studies the latest technological trends, market share of luxury vehicle manufacturers across the country. The market is segmented by vehicle type, drive type, and price range. The report offers market size and forecast on the Indian luxury car market in value (USD billion) for all the segmentations mentioned above.

By Vehicle Type
Hatchback
Sedan
SUV
By Drive Type
IC Engine
Electric
By Price Range
INR 20 Lakh - 50 Lakh
INR 50 Lakh - 80 Lakh
Above INR 80 Lakh

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Key Market Trends

Luxury SUVs are Witnessing Rapid Growth in the Country

In 2019, the market studied registered a slow growth rate, due to many obstacles, such as slow economic growth, growing liquidity pressure, and change in GST rates, all have impacted the sales of luxury vehicles in the country. However, despite the slow growth rate, the sales of luxury SUVs is increasing as the buyers are shifting their focus on luxury SUV from Luxury Sedans and Luxury Hatchbacks.

However, the sales of luxury cars were affected by the COVID-19 pandemic in 2019 - 2020. Automobile manufacturers across the country were forced to temporarily stop their production, as the supply chain was widely disturbed, and customers were forced to stay indoors due to the nationwide lockdown imposed by the government. However, to prevent economic collapse, various state governments have started to lift the restriction allowing various manufacturers to resume the production of vehicles.

In order to meet the growing demand, international companies, like BMW, Mercedes Benz, Volvo, and Audi, are launching new models every year. For instance, in October 2019, Mercedes-Benz launched the G 350 D luxury SUV with a starting price of INR 1.5 crore. With the growing demand for luxury SUVs, the company has planned to launch SUVs from its various segments.

BMW’s locally-assembled SUV range contributed over 50% to its overall sales, with strong demand from X1 and X3 variants. In March 2020, BMW launched an updated version of BMW X1 with a BS-VI engine at a price between INR 35.9 - 42.9 lakh. According to the company, BMW X1 is the highest-selling model in the country.

Volvo had the biggest growth among the luxury car manufacturers. The company’s new line-up of SUVs is more successful. In December 2019, Volvo Cars launched BS-VI compliant XC40 T4 R-Design petrol variant in India at a price of INR 39.9 lakh. According to the company, the XC40 is the only vehicle in the segment to have radar-based Active Safety features, like City Safety with Steering Assist, which activates at speeds above 50 kmpl and helps in collision avoidance.

Jaguar Land Rover (JLR) SUVs also witnessed significant growth in sales and accounted for over 50% of the total sales in the country. In February 2020, JLR launched a new BS-VI compliant Discovery Sport in India at a starting price of INR 57.06 lakh for the S model and INR 60.89 lakh for the R-Dynamic SE model.

India Luxury Car Market Growth

Growing Demand for Pre-owned Luxury Vehicles Hindering the New luxury Car Market

The sales of pre-owned vehicles in India have witnessed a sharp increase over the past few years, as the demand for luxury vehicles continues to increase. In 2019, the sales of pre-owned luxury vehicles saw a growth of more than 16%. In order to cater to the growing demand, the pre-owned luxury vehicle market is getting more organized with easy access to finance, annual maintenance contracts, and lower entry prices. In 2019, the Indian government, in order to boost sales of pre-owned vehicles, reduced the goods and service tax (GST) from 28% to 18%, which may significantly reduce the price of pre-owned luxury vehicles and hinder the growth of the new luxury vehicle sales.

As the market share of organized pre-owned vehicle sellers continues to grow, the sales of preowned luxury vehicles are also expected to witness high growth. The organized pre-owned vehicle sellers, like Mahindra First Choice Wheels, conduct technical inspections and offer customers up to two years of warranty along with other benefits, which inspire confidence among buyers, leading to increased sales.

As per automobile dealers, the demand for pre-owned luxury cars has been growing at approximately 35%-45% Y-o-Y basis. Owners of luxury cars usually sell their vehicles after 1-2 years, as they desire upgraded and better models.

The number of service providers entering the market with excellent marketing strategies and the ability to penetrate the consumer mind is proving helpful for the industry. Big Boy Toyz is one such company that specializes in pre-owned luxury cars and has its presence in major automotive hubs like Hyderabad, Mumbai, and Delhi. This company comes up with an impressive lineup in its inventory of pre-owned luxury, sports, and supercars.

With the ease of paperwork processing, customer service, and aftersale service provided by such companies, the upper-middle and above classes of the country are choosing to go for the deals provided by them over buying new cars, which are heavily levied with import taxes that are indirectly collected from the buyer.

India Luxury Car Market Share

Competitive Landscape

Some of the prominent players in the market are Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Lexus, and Volvo, among others. The top five luxury car manufacturers jointly sold 40,340 units in 2018, compared to 38,989 units sold in 2017, a growth of 3.4%. In 2018, the luxury car manufacturers faced a hard time, due to the financial market development, changing customer sentiment, and changes in tax policies.

However, Mercedes-Benz India maintained its leadership position in the domestic luxury car market and sold a record of 15,538 units in 2018, increasing by 1.4%, compared to 2017 (15,330 units). Tata Motors-owned Jaguar Land Rover witnessed a growth of 16% and sold 4,596 units in 2018. Volvo’s sales increased by 30% in 2018, when compared to 2017. Major companies are planning to launch electric luxury vehicles in the country. For instance, in April 2020, Mercedes-Benz is planning to launch an electric SUV EQC and locally assemble some models.

Recent Developments

Mercedes-Benz launched the 2021 Mercedes me connect on its flagship model, the S-Class Maestro Edition.

The tech distinctively brings Alexa and Google Home integration with Mercedes Me on the S-Class, as well as Parking Solutions with navigation. The connected car technology has been seen on the brand's recent spur of launches through 2020 and may be more actively available on new and existing products in 2021, according to the company.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Drivers

    2. 4.2 Market Restraints

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Bargaining Power of Buyers/Consumers

      2. 4.3.2 Bargaining Power of Suppliers

      3. 4.3.3 Threat of New Entrants

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Vehicle Type

      1. 5.1.1 Hatchback

      2. 5.1.2 Sedan

      3. 5.1.3 SUV

    2. 5.2 By Drive Type

      1. 5.2.1 IC Engine

      2. 5.2.2 Electric

    3. 5.3 By Price Range

      1. 5.3.1 INR 20 Lakh - 50 Lakh

      2. 5.3.2 INR 50 Lakh - 80 Lakh

      3. 5.3.3 Above INR 80 Lakh

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share

    2. 6.2 Company Profiles

      1. 6.2.1 Mercedes-Benz

      2. 6.2.2 Volvo AB

      3. 6.2.3 BMW

      4. 6.2.4 Audi

      5. 6.2.5 Land Rover

      6. 6.2.6 Rolls-Royce Holding PLC

      7. 6.2.7 Bentley Motors

      8. 6.2.8 Lexus

      9. 6.2.9 Jaguar

      10. 6.2.10 Porsche

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

**Subject to Availability

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Frequently Asked Questions

The India Luxury Car Market market is studied from 2018 - 2026.

The India Luxury Car Market is growing at a CAGR of >6% over the next 5 years.

The India Luxury Car Market is valued at 1 Billion USD in 2018.

The India Luxury Car Market is valued at 2 Billion USD in 2026.

Volvo, Land Rover, Audi, Mercedes-Benz, BMW are the major companies operating in India Luxury Car Market.

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