Luxury Car Market By Vehicle Type (Sedan, Hatchback, SUV), Propulsion Type (IC Engine, Electric) & Region for 2024-2031

Luxury Car Market Valuation – 2024-2031

Rising Consumer demand for high-performance automobiles with advanced technology, outstanding craftsmanship, and premium amenities like autonomous driving, upgraded infotainment systems, and cutting-edge safety measures is increasing. As global wealth levels climb, particularly in emerging countries such as China, India, and the Middle East, more people can purchase luxury cars is surpassing USD 600.04 Billion in 2024 and reaching USD 6Billion by 2031.

Furthermore, the growing popularity of electric luxury vehicles, fueled by environmental concern and government incentives, is broadening the market. Manufacturers are responding with electric vehicles that combine performance, sustainability, and elegance, enticing environmentally aware yet rich customers is expected to grow at a CAGR of about 11.85% from 2024 to 2031.

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Luxury Car Market: Definition/ Overview

A luxury car is a high-end vehicle that provides better quality, performance, comfort, and advanced amenities than a standard model. These vehicles frequently feature cutting-edge technology, high-quality materials, and superb craftsmanship, resulting in an improved driving experience. Luxury automobiles are used for a variety of purposes, including personal transportation and status symbols, and they are frequently driven by wealthy individuals, executives, and celebrities. The future of the luxury car market seems positive, thanks to developments such as electric cars (EVs), self-driving technologies, and rising desire for personalized and sustainable solutions.

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Will Growing Popularity of Electric Luxury Cars Drive the Luxury Car Market?

The growing popularity of electric luxury vehicles is expected to fuel significant expansion in the luxury car sector. As consumers become more environmentally conscious and governments tighten emissions laws, luxury manufacturers are spending more in electric vehicle (EV) technologies. According to the International Energy Agency (IEA), global sales of luxury electric vehicles will increase by more than 40% in 2023, with electric models accounting for 20% of total luxury automobile sales. This trend is especially noticeable in Europe and North America, where wealthy consumers are lured to high-performance EVs that mix luxury, sustainability, and cutting-edge technology. Automakers are reacting with a slew of new electric luxury cars that boast long-range capability, advanced infotainment systems, and high-end features aimed at environmentally aware customers.

In March 2024 Mercedes-Benz stated that it would convert to an all-electric car lineup by 2030, with a concentration on high-end electric vehicles for luxury buyers. In February 2024 Audi unveiled their all-electric luxury sedan, the Audi A8 e-tron, hoping to capitalize on the increased demand for high-performance electric vehicles. Governments are also aiding this transformation, with the European Union’s Green Deal seeking to achieve zero-emission automobile sales by 2035. As luxury car manufacturers continue to innovate and expand their electric products, the market for electric luxury vehicles is predicted to rise fast, adding to the total growth of the luxury automobile sector.

Will Growing Supply Chain Disruptions Hamper the Growth of the Luxury Car Market?

Growing supply chain disruptions may stymie the expansion of the luxury automobile market, especially as manufacturers rely on complicated worldwide supply chains for high-quality materials, innovative components, and technological integration. Recent disruptions, such as the global semiconductor shortage, have had a substantial influence on vehicle production delays, particularly for luxury cars that require specialized parts and complex technologies. These delays can lead to longer wait times for customers, lower sales volumes, and higher expenses for manufacturers, harming profitability and brand reputation.

Furthermore, luxury car manufacturers are increasingly focusing on innovation, such as the incorporation of electric vehicle (EV) technology and advanced driver assistance systems (ADAS). Supply chain interruptions can cause delays in the production of crucial EV components like batteries and electric drivetrains, restricting the ability to fulfill rising demand. While automakers are striving to adjust by diversifying suppliers and reshoring certain production processes, continued logistics, raw material, and labor shortages may continue to impede the luxury car market’s growth in the foreseeable future.

Category-Wise Acumens

Will Rising Usage of SUV Propel the Luxury Car Market?

The increasing popularity of SUVs will greatly boost the growth of the luxury car market. SUVs have grown in popularity due to their blend of luxury, performance, and versatility, which appeals to affluent buyers looking for both comfort and functionality. The global market for luxury SUVs has risen, particularly in North America, Europe and China. In 2023, luxury SUVs accounted for more than half of total luxury car sales, with growth rates outpacing traditional sedans and hatchbacks. SUVs are becoming increasingly popular among high-income buyers because to their spacious interiors, off-road capabilities, and the growing trend of larger, more luxury vehicles.

While sedans have typically dominated the luxury car class, the SUV market has eclipsed them in recent years as buyer preferences evolve. Luxury hatchbacks, while popular in some regions such as Europe, are still a minor segment of the overall luxury automobile industry. The rising demand for luxury SUVs is being driven by a growing preference for larger, more flexible cars, as well as the emergence of electric luxury SUVs, which appeal to environmentally aware purchasers. The trend toward SUVs is projected to continue as more manufacturers prioritize supplying innovative, high-tech features and hybrid/electric alternatives in their luxury SUV ranges.

Will Rising Demand of Internal Combustion (IC) Engine Drive the Growth of Luxury Car Market?

The increasing demand for Internal Combustion (IC) engine cars will continue to drive the expansion of the luxury car market, especially in places where traditional vehicles are still popular. Despite the growing trend toward electric cars (EVs), many luxury automobile customers continue to favor the performance, driving experience, and longer driving range provided by IC engine vehicles. According to the International Organization of Motor Vehicle Manufacturers (OICA), IC engine vehicles would account for more than 75% of worldwide luxury automobile sales by 2023. Markets such as North America, the Middle East, and portions of Asia-Pacific continue to see strong demand for high-performance luxury sedans, SUVs, and sports cars powered by traditional combustion engines, owing to consumer preferences for powerful engines and established refuelling infrastructure.

Similarly, Porsche revealed intentions to extend its IC engine selection, including high-performance versions of the 911, which is still one of the brand’s best-selling vehicles. Governments in places such as the United States and the Middle East are not moving as swiftly toward EV adoption, owing to the well-established infrastructure for gasoline and diesel vehicles, which supports demand for IC engine-powered luxury cars.

The growing acceptance of luxury EVs is driven by rising consumer demand for environmentally friendly vehicles that do not sacrifice performance or elegance. The rise of advanced technologies, such as self-driving cars, AI integration, and ultra-fast charging infrastructure, has made electric vehicles more tempting to wealthy purchasers. With governments, particularly in Europe and North America, enacting strategies to phase out gasoline-powered vehicles by 2035, the electric propulsion category is likely to continue growing rapidly, eventually closing the gap with the IC engine segment in the following years.

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Country/Region-wise

Will Rising Disposable Income in North America Drive the Luxury Car Market?

Rising disposable incomes in North America are predicted to fuel significant expansion in the luxury car market. Consumer purchasing power continues to rise, particularly in the United States and Canada, allowing more affluent consumers to acquire premium vehicles. According to the Bureau of Economic Analysis, disposable income in the United States will rise by 4.2% year on year in 2023, adding to an increase in luxury vehicle sales. Luxury automobile demand is predicted to rise as consumers seek higher-end amenities, technology, and performance. This includes electric and hybrid models. The market is also backed by a strong predilection for luxury SUVs and high-performance sedans, which are becoming increasingly popular among North American buyers.

In February 2024, Tesla claimed a record number of luxury electric vehicle sales in North America, with strong demand for premium vehicles like the Model S and Model X. In March 2024, General Motors (GM) announced that it would extend its luxury electric car lineup under the Cadillac brand, capitalizing on North America’s growing demand for premium EVs. Government regulations also play a role, with several states in the United States offering incentives for the purchase of electric vehicles and green cars. These trends, together with increased disposable income, position North America as a critical region for the continued growth of the luxury car market.

Will Rising Seeking High-Tech in Asia-Pacific Propel the Luxury Car Market?

The increasing demand for high-tech features in Asia-Pacific is expected to boost the luxury car market. As consumers in China, Japan, and South Korea become more tech-savvy, the demand for advanced in-car technologies such as self-driving cars, artificial intelligence (AI)-enabled systems, and next-generation infotainment systems drives luxury vehicle sales. According to the China Association of Automobile Manufacturers (CAAM), the Asia-Pacific area, notably China, is the largest and fastest-growing market for luxury cars, with premium vehicle sales predicted to increase by 8.4% per year until 2025. The growing demand for high-tech, connected, and electrified automobiles is altering the market, with affluent consumers wanting novel technologies that improve convenience, safety, and driving experiences.

Similarly, Mercedes-Benz expanded their “MBUX” infotainment system across Asia-Pacific, which combines AI and voice control to provide a more personalized driving experience. Governments are also providing incentives to encourage the adoption of high-tech, green vehicles, with China setting ambitious targets of 25% electric car sales by 2025. With expanding tech demand, rich consumer bases, and supporting government regulations, Asia-Pacific is a vital region for the future growth of the luxury car market.

Competitive Landscaped

The competitive landscape of the luxury car market is marked by intense rivalry among a diverse range of automakers, each striving to differentiate through innovation, design, and technological advancements. Manufacturers focus on creating unique selling propositions by offering premium features such as advanced driver-assistance systems (ADAS), autonomous driving technologies, and state-of-the-art infotainment. Additionally, the rising shift toward electric vehicles (EVs) has led to heightened competition, with luxury brands investing heavily in developing high-performance electric models to cater to eco-conscious consumers. Companies are also leveraging customization options, sustainability efforts, and superior customer service to attract affluent buyers. Strategic partnerships, collaborations, and an increased focus on digitalization and online sales platforms further intensify competition in the luxury car market.

Some of the prominent players operating in the luxury car market include:

• Mercedes-Benz
• BMW
• Audi
• Lexus
• Tesla
• Volvo
• Jaguar
• Land Rover
• Porsche
• Aston Martin
• Ferrari
• Bentley
• Maserati
• Rolls-Royce

Latest Developments

• In April 2024, SKF Group partnered with top automotive OEMs to create breakthrough wheel bearing solutions for electric and driverless vehicles. The emphasis is on boosting bearing durability and minimizing energy usage, which aligns with the automotive industry’s commitment to sustainability.
• In February 2024, Timken introduced a new series of wheel bearings aimed at reducing noise and vibration in both conventional and electric vehicles. These bearings are designed to improve ride comfort while lowering the entire lifecycle cost of the vehicle, establishing Timken as a leader in high-performance bearings for the automotive industry.

Report Scope

Luxury Car Market, By Category

Vehicle Type:

• Sedan
• Hatchback
• SUV

Propulsion Type:

• IC Engine
• Electric

Region:

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa

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