Luxury car sales in India reached new heights in 2023, with young professionals driving the surge in demand. Carmakers sold an average of 128 cars priced over ₹50 lakh ($70,000) per day, a significant increase from the pre-Covid levels of 95 per day in 2019. The total number of luxury car sales in the country hit a new calendar-year high as a result.
The rise in sales can be attributed to a few factors. Firstly, the lifestyle changes brought about by the Covid-19 pandemic led many young professionals to opt for high-end automobiles. Furthermore, robust corporate earnings also played a role in boosting sales. Carmakers expect this trend to continue due to rising income levels and the relatively low penetration of luxury cars in India.
Industry estimates show that approximately 46,000-47,000 luxury vehicles were sold in India in 2023, marking a 21% increase compared to the previous year and a 35% increase compared to 2019.
While Mercedes-Benz and BMW are yet to announce their sales figures for 2023, Audi recently revealed that its sales surged by 89% to 7,931 units in 2023 from 4,187 units in the previous calendar year. This growth outpaced the overall industry growth rate. Balbir Singh Dhillon, head of Audi India, noted that the company experienced a significant surge in demand from salaried professionals, doctors, lawyers, and chartered accountants. He mentioned that 42% of Audi’s sales are now to consumers aged under 40, indicating a spreading of wealth across different age groups.
Mercedes-Benz also witnessed structural changes in its customer demographics, with more young professionals and women buyers opting for their vehicles. Santosh Iyer, the managing director and CEO of Mercedes-Benz India, stated that 2023 was the company’s best year ever. The average age of their E-Class and C-Class customers has decreased significantly in recent years, and the share of salaried professionals among their customers has more than doubled.
BMW India similarly reports that consumers aged 35-40 years now account for a significant portion of their sales. One-third of their overall volumes come from the corporate sector.
This sales surge in the luxury car segment can be attributed to the changing corporate landscape in India. Salaried professionals, doctors, lawyers, and start-up entrepreneurs are benefiting from strong corporate earnings and hefty payouts from employee stock ownership plans. This, in turn, has led to an increase in indulgence and an uptick in luxury car sales.
Industry insiders highlight the enormous potential for luxury carmakers in India, given its status as the fastest-growing major economy in the world, boasting a high number of billionaires, and low penetration of luxury cars. The share of luxury vehicles in India’s automobile market is only slightly over 1%, which is significantly lower compared to other major economies. For instance, Taiwan’s penetration of luxury vehicles stands at approximately 20%.
Income levels, which are expected to rise further, will likely contribute to increased luxury car sales. Additionally, the transition to electric vehicles (EVs) is expected to support sales in this segment. The government’s favorable policies, such as lower GST rates on EVs compared to petrol and diesel vehicles, as well as the potential for local assembly, are making EVs more affordable and attractive to consumers. Audi India is currently studying the viability of commencing local assembly of EVs.
Despite the notable growth in luxury car sales, the more affordable end of the market also saw an increase, with sales of cars, sedans, and utility vehicles growing by 8% to 4.1 million units in 2023.
In conclusion, luxury car sales in India reached new heights in 2023, fueled by young professionals and robust corporate earnings. Carmakers are optimistic about the future, as rising income levels and the low penetration of luxury cars indicate a vast potential for growth in the market. The transition to electric vehicles is also expected to play a significant role in shaping the future of the luxury car segment.
