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

  • ID: 4763945
  • Report
  • April 2021
  • Region: India
  • 60 pages
  • Mordor Intelligence

FEATURED COMPANIES

  • Audi
  • Bentley Motors
  • BMW
  • Jaguar
  • Land Rover
  • Lexus
  • MORE
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 while registering a CAGR of more than 6% during the forecast period.

With the spread of Novel Coronavirus (COVID-19) disease, 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 growth of the market.

India is a huge market for vehicles and possesses a very high potential for luxury cars. Whereas the luxury car market penetration level in the country is low but 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.

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 outbreak of COVID-19 pandemic in 2019-20. 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 indoor due to the nation-wide lockdown imposed by the government. However, to prevent economic collapse various state governments across the country have started to lift the restriction allowing various manufacturers to resume production of vehicles.

To meet with the growing demand international companies like BMW, Mercedes Benz, Volvo, 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 price between INR 35.9 - 42.9 lakh. According to company BMW X1 is the highest selling models in the country.

Volvo had the biggest growth among the luxury car manufacturers. The company’s new line-up of SUVs is being 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 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 R-Dynamic SE model.

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 has reduced the goods and service tax (GST) from 28% to 18%, which will significantly reduce the price of pre-owned luxury vehicles, which is likely to 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 inspires 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% year-on-year basis, as owners of the luxury cars usually sell of their vehicles after a year or two years, as they desire for upgraded and better models.

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

With the ease of paper work processing, customer service and after sale servies provided by such com[anies, 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 is indirectly collected from the buyer.

Competitive Landscape

Some of the prominent players in the market are Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Lexus, Volvo amongst 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, increased by 1.4%, when 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, Mercedes-Benz is planning to launch electric SUV EQC in April 2020 and is also planning to locally assemble some models.

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Note: Product cover images may vary from those shown

FEATURED COMPANIES

  • Audi
  • Bentley Motors
  • BMW
  • Jaguar
  • Land Rover
  • Lexus
  • MORE
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 SUV
5.2 Drive Type
5.2.1 IC Engine
5.2.2 Electric
5.3 Price Range
5.3.1 INR 20 Lakh - 50 Lakh
5.3.2 INR 50 Lakh - 80 Lakh
5.3.3 Above INR 80 Lakh

6 COMPETITIVE LANDSCAPE
6.1 Vendor Market Share
6.2 Company Profiles
6.2.1 Mercedes-Benz
6.2.2 Volvo AB
6.2.3 BMW
6.2.4 Audi
6.2.5 Land Rover
6.2.6 Rolls-Royce Holding PLC
6.2.7 Bentley Motors
6.2.8 Lexus
6.2.9 Jaguar
6.2.10 Porsche

7 MARKET OPPORTUNITIES AND FUTURE TRENDS
Note: Product cover images may vary from those shown
  • Mercedes-Benz
  • Volvo AB
  • BMW
  • Audi
  • Land Rover
  • Rolls-Royce Holding PLC
  • Bentley Motors
  • Lexus
  • Jaguar
  • Porsche
Note: Product cover images may vary from those shown

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