Market Snapshot
| Study Period: | 2018-2027 |
| Base Year: | 2021 |
| Fastest Growing Market: | Asia-Pacific |
| Largest Market: | Asia-Pacific |
| CAGR: | >5 % |
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Market Overview
The luxury car market was valued at around USD 440 billion in 2021. The market is projected to reach USD 600 billion in 2027, with a CAGR of approximately 5% during the forecast period (2022-2027)
The COVID-19 pandemic had a significant impact on the luxury car market in the short term as the sales and production witnessed a decline in 2020. Furthermore, the pandemic affected the spending power of every individual. However, after the restrictions were lifted, the market has been gradually gaining its lost momentum.
A significant growth of tangible luxury offerings in vehicles, shifting consumer preferences from sedans to SUVs, and increasing disposable incomes of consumers have been propelling the demand for luxury cars worldwide. However, an increase in import tariffs is expected to hinder the growth of the luxury car market. For instance, the US President-elect is expected to increase the import tariffs on German luxury cars. BMW and other German luxury car manufacturers may face a 35% import duty for cars not built in the United States.
Luxury cars provide a high level of comfort and safety features, creating opportunities for the market. Moreover, the growing trend of electric luxury vehicles worldwide is fueling the demand for luxury cars. Major luxury car manufacturers are launching electric variants of their vehicles due to growing environmental concerns and increasing fuel prices, which may accelerate the growth of the luxury car market over the forecast period.
Some of the major players in the market are Mercedes-Benz, BMW, Lexus, Audi, Volvo, Land Rover, Jaguar, and Tesla. The other players in the market include Ferrari, Lamborghini, and Porsche.
Scope of the Report
The luxury car market is segmented by vehicle type (hatchback, sedan, and SUV), drive type (IC engine and electric), and geography (North America, Europe, Asia-Pacific, and Rest of the World). The report offers the market sizes and forecast in terms of value (USD billion) for all the above segments.
| Vehicle Type | |
| Hatchback | |
| Sedan | |
| Sports Utility Vehicle |
| Drive Type | |
| IC Engine | |
| Electric |
| Geography | |||||||
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Key Market Trends
IC Engines are Expected to Witness a Slow Growth Rate
The IC engine segment is currently leading the market. However, the demand for IC engine vehicles is anticipated to slow down over the forecast period. At present, major players, such as Mercedes-Benz, BMW, and Audi, cover a significant percentage of the share in the drive type segment of the luxury car market.
With the growing environmental concerns due to rising exhaust emissions, governments and environmental associations worldwide are tightening emission norms. As a result, the demand for sustainable and eco-friendly transportation, such as EVs, is increasing, with governments offering higher incentives and subsidies to these vehicle owners. For instance, China registered the highest number of new EV registrations in 2020. However, North America is expected to lead the luxury EV sales due to higher disposable incomes and the availability of EV infrastructure in the region.
Automakers are launching EVs even in developing markets. For instance, in August 2020, Mercedes-Benz announced the start of sales of its first electric vehicle, EQC 400, at its dealer network in Brazil. The growing demand for and focus on style, power, and advanced telematics may continue to propel the demand for luxury EVs.
Additionally, luxury car component manufacturers are focusing on developing next-generation smart mobility technologies, such as autonomous driving, personal voice assistance, and retina recognition, which are expected to boost the sales of luxury EVs over the forecast period.
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Asia-Pacific is Expected to Lead the Market
Currently, China has the highest growth potential among all the developing countries in the luxury car market. Premium carmakers, such as Audi, Mercedes-Benz, BMW, Lexus, and Volvo, have always maintained positive growth in the Chinese luxury car market. According to the China Automobile Dealers Association, the country's luxury car dealers sold 277,000 vehicles in April 2020, an 11.1% increase over April 2019. Luxury car sales accounted for 18.7% of the market in April 2020, representing a 3.6% rise over April 2019 and a 0.4% increase over the market share in March.
During the peak of the pandemic, when major European carmakers faced interruption in the supply chain, it created an opportunity for the local companies to introduce their luxury models. For instance, the 2020 Hongqi H9 was by Rolls-Royce's ex-designer Giles Taylor and another stylist Dinh Yanfeng. In China, Hongqi cars are only available for high-ranking government officials. China is also one of the biggest markets for Mercedes-Maybach. In 2019, Mercedes-Benz sold around 12,000 luxury Maybachs in the country.
India is also one of the growing markets in Asia-Pacific. However, owing to COVID-19, the market witnessed its lowest figure. For instance, according to the Federation of Automobile Dealers Associations (FADA), the data for new vehicle registrations in July 2020 revealed that the overall share of luxury car players in the total passenger vehicle market contracted to 0.50% in the month, compared to 1.11% for the same month last year. July 2020 sales figures of the ten luxury carmakers in India showed that demand dropped by 59%.
Mercedes and BMW dominated the luxury sedan segment of the Indian market. In the first three months of 2020, Mercedes sold 2,386 units, followed by BMW India, which sold 2,365 units. After a decline in the second quarter due to the pandemic, the market gradually started gaining momentum in the last quarter. Moreover, in 2020, Mercedes-Benz India sold over 7,893 new cars during the January-December period.
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Competitive Landscape
Some of the key players in the luxury car market are Mercedes-Benz, BMW, Volkswagen Group, and Tesla. The market is highly driven by factors like advanced technology, more comfort, growing investment in EV technology, and improved living standards worldwide. Major luxury car manufacturers are investing in other luxury car companies to gain more market share and provide a more luxurious experience. For instance, in 2020, Mercedes-Benz increased its stake in Aston Martin from 5% to 20%. As its long-term strategy, Aston Martin planns to increase its revenue to GBP 2 billion and attain earnings of about GBP 500 million in the next five years.
Recent Developments
- In January 2021, Mercedes-Benz India announced its plans to introduce 15 products in the Indian market. A-Class Limousine, new GLA, and AMG GT Black Series were some of the vehicle models lined up for a 2021 debut.
- In January 2021, Hongqi launched its three models (H9, H5, and HS5) in Kuwait. The company will sell its vehicles in cooperation with Kuwaiti dealer Al Khalid Auto.
- In January 2021, Bentley introduced its hybrid model following the launches of the new Bentayga V8 and Bentayga Speed. The new Bentayga Hybrid is the company's third model in the luxury SUV portfolio.
Table of Contents
1. INTRODUCTION
1.1 Study Assumptions
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Drivers
4.2 Market Restraints
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5. MARKET SEGMENTATION
5.1 Vehicle Type
5.1.1 Hatchback
5.1.2 Sedan
5.1.3 Sports Utility Vehicle
5.2 Drive Type
5.2.1 IC Engine
5.2.2 Electric
5.3 Geography
5.3.1 North America
5.3.1.1 United States
5.3.1.2 Canada
5.3.1.3 Rest of North America
5.3.2 Europe
5.3.2.1 Germany
5.3.2.2 United Kingdom
5.3.2.3 France
5.3.2.4 Spain
5.3.2.5 Rest of Europe
5.3.3 Asia-Pacific
5.3.3.1 China
5.3.3.2 Japan
5.3.3.3 India
5.3.3.4 South Korea
5.3.3.5 Rest of Asia-Pacific
5.3.4 Rest of the World
5.3.4.1 South America
5.3.4.2 Middle-East and Africa
6. COMPETITIVE LANDSCAPE
6.1 Vendor Market Share
6.2 Company Profiles*
6.2.1 Daimler AG (Mercedes-Benz)
6.2.2 Bayerische Motoren Werke AG (BMW)
6.2.3 Volvo Group
6.2.4 Volkswagen Group
6.2.5 Jaguar Land Rover Automotive PLC
6.2.6 Fiat Chrysler Automobiles
6.2.7 Ford Motor Company
6.2.8 FAW Car Company
6.2.9 Hyundai Motor Group
6.2.10 Tesla Inc.
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
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Frequently Asked Questions
What is the study period of this market?
The Luxury Car Market market is studied from 2018 - 2027.
What is the growth rate of Luxury Car Market?
The Luxury Car Market is growing at a CAGR of >5% over the next 5 years.
What is Luxury Car Market size in 2018?
The Luxury Car Market is valued at 440 Billion USD in 2018.
What is Luxury Car Market size in 2027?
The Luxury Car Market is valued at 600 Billion USD in 2027.
Which region has highest growth rate in Luxury Car Market?
Asia-Pacific is growing at the highest CAGR over 2021- 2026.
Which region has largest share in Luxury Car Market?
Asia-Pacific holds highest share in 2021.
Who are the key players in Luxury Car Market?
Daimler AG, Bayerische Motoren Werke AG (BMW), Jaguar Land Rover Automotive PLC, Volkswagen Group, Tesla Inc. are the major companies operating in Luxury Car Market.
