How India’s Luxury Car Market Shifts Into High Gear
As the number of high-net-worth individuals rises and preferences shift towards top-end models and electric vehicles, India’s luxury car market is evolving rapidly.
India’s luxury car market is speeding ahead, even as the broader auto industry faces challenges. With key players like Mercedes-Benz, Škoda Auto Volkswagen India—which includes prestigious brands like Audi, Porsche, and Lamborghini—and BMW driving growth, the demand for high-end vehicles is accelerating at a record pace. What was once considered a niche market is now expanding rapidly, fuelled by changing consumer preferences, rising disposable incomes, and better infrastructure.
The Big Picture: Rapid Expansion of the Luxury Segment
India’s luxury car market, defined as vehicles priced above Rs 50 lakh, remains a relatively small part of the overall auto industry—just over 1 per cent by the end of H1 2024. However, this segment is growing significantly. According to Soumen Mandal, Senior Analyst at Counterpoint Research, "India's luxury car market accounted for just over 1 per cent of the total market by the end of H1 2024. However, it has been growing significantly over the past few years. In 2024, annual luxury car sales are projected to exceed 50,000 units, with a year-on-year growth of 56 per cent."
Mandal attributes this growth to several factors: “The increasing number of high-net-worth individuals (HNIs), easier access to vehicle loans, and a younger demographic's preference for luxury vehicles are expected to drive this growth, helping the luxury car segment outperform the overall passenger car market.” With lower car penetration in India compared to countries like the US, China, and Germany, Mandal predicts the luxury segment could capture 5 per centof the overall market by 2030.
Mercedes-Benz: Record Sales and a Growing TEV Segment
Leading the pack is Mercedes-Benz India, which continues to post record sales. "We’ve been successfully bucking the auto industry trend by posting double-digit growth and record sales, despite facing continued headwinds," says Santosh Iyer, MD and CEO of Mercedes-Benz India. The brand saw its best-ever Q3 with a 21 per cent sales surge, while year-to-date (YTD) sales climbed by 13 per cent, cementing Mercedes-Benz’s status as India’s most desirable luxury car brand.
Iyer attributes this success to customer trust, innovative products, and superior after-sales experiences. "Our best-ever Q3 sales at 21 per cent and highest YTD sales performance at 13 per cent underline continued customer trust, making Mercedes-Benz the most desirable luxury brand in India. This resounding success in an otherwise challenging market underscores the strength of desirable products, our elevated service experiences, and an unmatched value proposition of our financial services.”
In addition, the Top-End Vehicle (TEV) segment of Mercedes-Benz grew by 18 per cent YTD 2024, while the Maybachline posted an astonishing 125 per cent growth. High demand for these luxury models has stretched waiting lists into 2025, with over 120 bookings for the AMG G 63 SUV, launched at Rs 3.6 crore, before its official release.
BMW: Record Sales and an Expanding EV Portfolio
BMW India has also been a strong performer, posting its best-ever year-to-date car sales with a 10 per cent growth in YTD Q3. In the first nine months of 2024, 10,556 BMW and MINI cars were delivered, alongside 5,638 motorcycles from BMW Motorrad. "BMW Group India is scaling new heights with consistent and robust business results," said Vikram Pawah, President and CEO, BMW Group India. This growth reflects a successful strategy and a commitment to a premium customer experience, positioning BMW as a leader in luxury and electric mobility in India.
BMW is also making a strong push in electric mobility, maintaining its leadership in the luxury EV segment with 725 fully electric BMW and MINI cars delivered YTD Q3 2024. With models like the BMW i7 and BMW iX dominating the market, BMW has become the first luxury car manufacturer in India to surpass 2,000 EV deliveries. BMW’s efforts are backed by an expansive electric ecosystem, with one of the country’s largest fast-charging networks spread across 51 cities. For its customers, BMW offers complimentary home chargers, destination charging, and smart e-routing services to build trust and support EV adoption.
In addition, BMW has invested Rs 365.5 crore in its Retail.NEXT facilities, which are designed to transform the car-buying experience by providing private consultation areas, vehicle handover zones, and dedicated spaces for electric and pre-owned vehicles across 56 facilities in 33 cities over the next 36 months.
Škoda Auto Volkswagen India: Elevating the Driving Experience
For Škoda Auto Volkswagen India, the focus is not just on the car—it’s on the experience of driving it. Improved infrastructure has made road trips more appealing, especially during the festive season. "The festive season in India is synonymous with family time, often requiring long-distance travel," says Piyush Arora, MD and CEO of Škoda Auto Volkswagen India. "With improved roads, infrastructure, and high-quality cars, road trips have become integral to family celebrations."
Škoda Auto Volkswagen is prioritising safety, offering features like six airbags and five-star Global NCAP safety ratings across its India-made vehicles. “We firmly believe that a well-engineered and safe car elevates the entire journey,” says Arora, emphasising the importance of creating cars that are comfortable, safe, and offer an unparalleled experience. Audi India is also experiencing strong demand, with popular models like the A4, A6, Q3, Q5, Q7, and the newly launched Q8 driving robust growth which was revealed by Balbir Singh Dhillon, the head of Audi India.
Changing Consumer Preferences and the Rise of EVs
As the luxury car market in India matures, consumer preferences are evolving. While entry-level luxury models maintain steady demand, the Top-End Vehicle (TEV) segment is growing rapidly. “The luxury market in India is maturing as we witness structural changes,” explains Santosh Iyer. “While demand for the entry segment is steady, the core segment and TEV segment are growing at an accelerated pace, underlining customers’ desire for higher trims, advanced features, and more exclusive models.”
Luxury vehicles in India are not just about petrol engines anymore; electric vehicles (EVs) are increasingly becoming part of the premium segment. Mercedes-Benz has made significant strides in the battery electric vehicle (BEV) segment, with BEV penetration reaching 6 per cent of its sales and growing by over 80 per cent YTD in 2024. Popular models like the EQA and the Mercedes-Maybach EQS SUV are spearheading this shift as luxury buyers turn toward sustainable options without compromising on performance or comfort.
The Road Ahead
India’s luxury car market is on a steep upward trajectory. With brands like Mercedes-Benz, Škoda Auto Volkswagen, and BMW pushing boundaries in innovation, customer experience, and electric mobility, the segment is set to continue outperforming the broader passenger vehicle market. According to Soumen Mandal, “With lower car penetration compared to developed countries like the US, China, and Germany, India’s luxury car market could reach a 5 per cent market share by 2030.”
As the number of high-net-worth individuals rises and preferences shift towards top-end models and electric vehicles, India’s luxury car market is evolving rapidly. Whether it’s a Maybach on order, a BMW i7 in a Retail.NEXT showroom, or an Audi Q8 ready for a family road trip, luxury vehicles in India are becoming more than just cars—they represent lifestyle, status, and a commitment to cutting-edge technology.
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