Upturn of Global Luxury Car Market
A significant growth of palpable luxury offerings in vehicles, shifting consumer likings from sedans to SUVs, and increasing disposable incomes of consumers have been propelling the demand for luxury cars worldwide.
Few of the factors, such as an increase in import tariffs are expected to hamper the growth of the luxury car market. For instance, the US President-elect is expected to increase the import tariffs on German luxury cars. The BMW and other German luxury car manufacturers might have to face a 35% import duty for cars not built in the United States.
The Expected Growth of Global Luxury Car Market in next 5 years
The global luxury car market was estimated at around USD 410 billion in 2020. The market is projected to grow to USD 566 billion in 2026, with a CAGR of approximately 5% during the forecast period. 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. This is also likely to accelerate the growth of the luxury car market over the forecast period.
The COVID-19 pandemic had a profound effect on the luxury car market directly as the sales and production witnessed a decline in 2020. Furthermore, the pandemic has greatly affected the spending power of every individual. After the restrictions were lifted, the market gradually started gaining its lost momentum.
Key Market Trends
The IC engine segment is currently leading the market. However, it is expected that the demand for IC engine vehicles will slow down over the forecast period. At present, major players, such as Mercedes-Benz, BMW, and Audi, cover a significant percentage of share in the drive type market segmentation in the global luxury car market.
Due to the rising exhaust emissions, environmental concerns are growing, this governments and environmental associations across the world are tightening emission norms. As a result, the demand for sustainable and environment-friendly transportation, such as EVs, is increasing, with governments offering higher incentives and subsidies to these vehicle owners.
Highest EV sales
China registered the highest number of new EV registrations in 2020. However, North America is expected to lead the luxury EV sales, owing to higher disposable incomes and EV infrastructure availability 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, in Brazil, at its dealer network. The growing demand for and focus on style, power, and advanced telematics, are expected to continue to propel the demand for luxury EVs. Moreover, luxury car component manufacturers are focusing on the development of next-generation smart mobility technologies, such as autonomous driving, personal voice assistance, and retina recognition, which are also expected to boost the sales of luxury EVs over the forecast period.