Luxury Car Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (Hatchback, Sedan, and Sport Utility Vehicle), By Propulsion Type (ICE and Electric) and Regional Forecast, 2020-2027

The global luxury car market size was valued at USD 449.7 billion in 2019 and is projected to reach USD 655.0 billion by 2027, exhibiting a CAGR of 9.3% during the forecast period.

At present, the luxury car market as a whole is undergoing social changes such as the modern lifestyle and the adoption of the latest technologies. Luxury brands seem to have a lower degree of remoteness, differentiation, and exclusivity towards the improvement of the quality of life. As a result, competition between these brands has intensified for gaining a higher brand identity. With enhancements in product standards, people’s perception of the car’s brand image plays a crucial role in their purchasing decision. High-end brands such as BMW, Mercedes-Benz, and Lexus must form attributes and values ​​that would reflect the ever-changing social values, which would further affect the buyer emotionally.

COVID-19 Pandemic to Decline Growth Backed by Consumers’ Focus on Saving More

The COVID-19 pandemic has had a drastic impact on the globally integrated automotive industry. Industry experts project that as compared to the mass car segment, the market will face greater resistance because customers will save cash and reduce purchases in the future. Potential luxury vehicle buyers will first focus on establishing and getting their business back on track, and then they may buy cars in the short term.

LATEST TRENDS

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Introduction of Electrified and Autonomous Cars is a Crucial Trend

Rapid advances in several fields, such as artificial intelligence and machine learning have subsequently led to advances in autonomous vehicles. The growth in research and development of the electrification of vehicles is one of the leading trends in the luxury vehicle industry. This factor is likely to augment the growth of this market. Additionally, the rapid development of various features, such as personal voice assistance, autonomous driving, and retina recognition, is also expected to promote the sales of luxury vehicles.

DRIVING FACTORS

Rising Adoption of the Electric Luxury Cars to Drive Growth

With the increasing concern for the environment and environmental protection, governments all over the world are tightening the emission standards for vehicles. As a result, the demand for environmentally friendly and sustainable transportation, such as electric vehicles is rapidly growing. Governments of various countries are also providing higher subsidies and incentives to these car owners.

• For instance, the U.K. government is providing tax-payer funded incentives of USD 7600 for each electric car.

Also, owing to the increasing disposable income and high net wealth of individuals, the preferential shift of end-users to choose luxury brands is gradually surging.

Increasing Demand for Pre-owned Luxury Cars to Aid Growth

According to car dealers, the demand for pre-owned luxury vehicles is continuously growing because these cars are frequently sold after one or two years of usage by owners for the reason of getting better models and upgrades. In order to meet the growing demand, the used luxury vehicle market is becoming more systematized, with easy access to financing, lower entry prices, and annual maintenance contracts.

• For instance, Maruti Suzuki’s True Value in India conducts a technical inspection and offers a two-years warranty coupled with other benefits. This will also lead to a rise in the sales of pre-owned luxury cars owing to the high confidence level among the consumers.

All these factors would lead to the widespread adoption of luxury cars.

RESTRAINING FACTORS

High Product Cost May Hinder Market Growth

As compared to conventional vehicles, luxury vehicles are very expensive in nature owing to their luxurious and advanced features, such as high-quality parts and expensive materials. Additionally, the cost of manufacturing cars with luxurious features and options is higher than the cost of manufacturing them with universal features. In addition to this, as the sales of luxury cars are very low, a large part of the selling price is used to pay for their development, making these types of cars more expensive. Therefore, the high cost of luxury vehicles is expected to hamper the market growth.

SEGMENTATION

By Vehicle Type Analysis

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Sedan Segment to Hold the Largest Share Fueled by Its High Production & Sales

Based on the vehicle type, the market is segmented into the hatchback, sedan, and sport utility vehicles. The sedan segment accounts for a major share in the global market owing to the high sales and production of luxury sedan. The sport utility vehicle segment is also expected to show exponential growth in the market over the forecast period owing to the rising demand for luxury SUVs among consumers.

By Propulsion Type Analysis

ICE Segment to Dominate Stoked by High Demand for These Vehicles

Based on the propulsion, the market is segmented into ICE and electric. The ICE segment holds the largest share in the global market owing to the rising demand and sales of these luxury vehicles globally. However, the electric segment is also expected to experience an astonishing growth in the market owing to the surging inclination of consumers towards luxury electric cars due. This is occurring because of the rising deployment of stringent emission regulations by governments.

REGIONAL INSIGHTS

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The market size in Asia Pacific stood at USD 231.8 billion in 2019. The region is likely to maintain a dominant position over the forecast period. At present, China has the highest growth potential amid all the developing countries in this market. Luxury vehicle automakers such as BMW AG, Audi, Lexus, Mercedes-Benz, and Volvo have upheld positive growth in the Chinese market. It is also projected that the market in North America will show considerable growth owing to the increasing demand for comfort and luxury in vehicles. It is estimated that Europe will exhibit significant growth in this market. This region is home to many vehicle manufacturers who often develop vehicles equipped with the latest technology.

KEY INDUSTRY PLAYERS

Daimler AG is the Top Player Owing to its Ability to Provide High-end Automobiles

Daimler is one of the largest commercial vehicle manufacturers and the world's largest manufacturer of high-end automobiles, with operations all over the world. The company provides financing, leasing, insurance, innovative mobility services, and fleet management. It owns Mercedes-Benz vans, cars, Daimler buses and trucks, and mobility divisions.

LIST OF KEY PLAYERS/COMPANIES PROFILED IN THIS REPORT:

• Daimler AG (Stuttgart, Germany)


• Bayerische Motoren Werke AG, (Munich, Germany)


• Volvo Car Corporation (Gothenburg, Sweden)


• Volkswagen AG (Wolfsburg, Germany)


• Tata Motors Limited (Mumbai, India)


• Toyota Motor Corporation (Toyota, Aichi, Japan)

KEY INDUSTRY DEVELOPMENTS:

• July 2020 – Bayerische Motoren Werke AG Sets up Competence Centre for E-drive Production  BMW Group is expanding its production capacity for electric drive by opening the Competence Centre in its largest production plant at Dingolfing. The company will be producing electric drive components such as high-voltage batteries, battery modules, and electric motors.


• August 2020 – Mercedes-Benz and CATL Went Under Strategic Partnership Mercedes-Benz and CATL went under a strategic partnership for the development of a cutting edge battery technology for the electrification of Mercedes-Benz models at high volumes. This will cover all models ranging from passenger cars to vans.


• January 2019 – Mercedes-Benz and Farasis Energy Co., Ltd. Enter in a Joint Partnership  A joint partnership will deliver a safe source of battery cell supply for Mercedes-Benz’s electrification strategy. The key fundamentals of the agreement include the industrialization and development of highly advanced battery technology, as well as the ambitious goal of achieving cost competitiveness. Farasis has secured safety through its planned capacity construction.

REPORT COVERAGE

An Infographic Representation of Luxury Car Market

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The global luxury car market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation