Why Luxury Car Sales Are Booming in India in 2022?

Why Luxury Car Sales Are Booming in India in 2022?

The Indian market has always been an attractive lure for international business houses. Its deep history with the luxury and lifestyle goods industry is showcased in history through the Maharajas of yesteryears who were the ultimate consumers of luxury consumer goods. Be it fashion, accessories, beauty, health or automotive, various brands have found tremendous success within their folds.

When the deadly virus struck in 2019, everything came to a standstill for a few months. Industries suffered and the global economic scenario was grim. As the world inched towards normalcy, the following months were uncertain and fraught with worry.

A couple of years later, the world post the Covid-19 pandemic has returned with a vengeance. The luxury car segment has reached its pre-pandemic sales levels and is, in fact, set to grow even further. Valued at USD 1.06 billion in 2021, the Indian Luxury Car Market is set to reach USD 1.54 billion by 2027 registering a 7% CAGR growth.

"We have entered 2022 with a very strong order book. From what we have seen in the first five months, the trend looks positive,"  says Lamborghini India Head Sharad Agarwal.

“Post Covid we have seen a huge comeback from the market. Our demand currently is one of the best ever demands we have seen in our existence in India. During the first quarter we did close to 4,000 cars and now an order bank of around 5,000 cars we have moving forward. This kind of a strong booking, order bank, we have never seen in the past,” said Santosh Iyer, vice president, sales and marketing, Mercedes-Benz India

Luxury Cars and the Indian Market
Why Did Luxury Car Sales Surge in India?
Future of the Luxury Cars in India

Luxury Cars and the Indian Market

India welcomed its first luxury car brand Mercedes-Benz into the market in 2004. It enjoyed a market monopoly till 2006 when BMW made its appearance in India, followed quickly by Audi in 2007.

Over the years, these three companies have vied for that top spot in terms of sales volume and have replaced each other a few times. The primary reason for this was new product launches, particularly in the smaller and more affordable models.

2010 was the year when these top three companies saw a high surge in sales numbers and recorded YOY growth of almost 82%. This was due to the rise in the affluent population. The Indian economy was surging and so was the disposable income. This marked an increase in consumer confidence and the willingness to splurge on a premium car.  

The biggest setback to the automobile industry came in the year 2016. The primary reason? Demonetization. Of course, the curb on the sale of diesel vehicles in the first half of the year had also contributed to it. So, the industry saw a marked drop in sale volume for the first time in a decade.

2017 saw the Indian government revising its GST structure that was applicable to luxury cars. Despite this and the fact that the overall sale volume growth was slow, the luxury car industry bounced back and the sales number was back on track. 2017 became the best year for all the players of luxury cars in the Indian market.

Why Did Luxury Car Sales Surge in India?

Over the next decade, while the industry saw ups and downs, the broader optimism persisted showcased via sales numbers. Even the average age of buyers dropped from 45 years to the mid-30s.

A new India was emerging with a new breed of entrepreneurs. Companies had begun offering higher and healthier pay packets to individuals passing out from top colleges and institutes.

All this added to the pool of ever-increasing high-net-worth individuals creating a bigger pool of prospective buyers. The economic growth and development in tier 2 and tier 3 cities of the country meant an increase in demand for luxury cars within these cities as well.

There is a strong reason for this surge in demand and the confidence in continued growth and demand for luxury vehicles in India.

  • Currently, India is adding the second highest number of billionaires to the world.
  • The buyers of today are first-generation entrepreneurs as opposed to the third or fourth generations before.
  • The customer base has expanded greatly.
  • Luxury car brands have increased the localisation of production, manufacturing and assembling to avoid high import duties.
  • This has greatly reduced the total cost of these cars making them attractive to the price-sensitive Indian market.
  • Pre-owned luxury cars have also found a large niche within the market.

The other segment within the luxury car market that is making waves with the new generation is the launch of electric vehicles. The advanced technology that supports electric vehicles makes it an attractive buy. Most luxury car brands are venturing into the electric car segment and also making plans to localise their units to make their prices attractive to their buyers

Luxury Car Sales in India
Luxury Car Sales in India

Future of the Luxury Cars in India

As a market, India is price sensitive and it is no different even in the premium luxury segment. Luxury car brands have studied, understood and addressed the concerns of the Indian market.

There is a huge scope of growth for this segment within the Indian market as currently the penetration of these brands only stands at 1%. With the fast-paced growth of the Indian economy and the quick rise of a new generation of billionaires, the future looks bright.

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The luxury car market is expected to see new entrants with every new launch and product. The growth of this segment looks remunerative driven by network expansion, deeper penetration into other markets with new and pre-owned car dealerships and expansion into complementary functions including car financing and customisation.


Which luxury car is sold the most in India?

Mercedes-Benz E-Class is the most sold luxury car in India. The luxury carmaker sold 2,839 units in FY22.

What has happened to the demand for luxury cars in India?

The demand for luxury cars was impacted due to the covid 19 lockdown but the demand drastically increased in 2022.

Is the luxury car market growing?

The luxury car market was valued at USD 1 billion in 2021 and is expected to reach USD 1.54 billion in 2027.

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