The global luxury cars market size was USD 612.32 Bn in 2022 and is likely to reach USD 1040.42 Bn by 2031, expanding at a CAGR of 6.7% during 2023–2031. The market growth is attributed to the increasing demand for high-performance cars.
Luxury cars are equipped with high-tech features. These features include a powerful engine, a luxurious interior, comfortable seats, and other amenities. Luxury cars are typically designed for superior comfort and high-end performance. It includes sports cars, supercars, exotic cars, and premium cars.
Luxury cars are high in cost, as they are equipped with higher-quality interior materials, automatic HVAC systems, power windows, power & heated seats, and high-performance engines, such as v-6 and higher-end V8. These engines have better fuel economy and offer more power, which further increases vehicle performance while driving.
Luxury car manufacturers are investing and implementing new technology in vehicles, such as autonomous driving, gesture updating, and personal voice assistance feature to improve performance. For instance, according to the VDA report, the German automotive industry decides to invest more than 250 Bn euros in R&D activities by 2027. It includes battery technology, digitization, and autonomous driving.
The COVID-19 pandemic had a negative impact on the luxury car market. The market growth decreased, due to the irregular supply and the lack of availability of raw materials required for manufacturing car components. Furthermore, the prolonged shutdown of showrooms and manufacturing plants owing to strict regulations imposed by governments across the globe to prevent the spread of the virus, disrupted the supply chain of the market.
Luxury Cars Market Dynamics
Key Trends
Rising demand adoption of pre-owned cars for customization is anticipated to drive the market. Customization of vehicles gaining popularity, as it allows to upgrade old cars by adding new advanced technologies and features. Modification of vehicles enhanced appearance and improves performance.
Major Drivers
Increasing adoption of electric luxury cars is expected to boost the market in the coming years. Rising environmental concerns among consumers encouraged them to adopt electric vehicles. Furthermore, stringent government regulations across the globe to reduce CO2 emissions that emits from petrol or diesel engine are likely to boost the sale of electric cars. Various governments also providing subsidies to car owners to support electric vehicles.
- For instance, according to The Guardian, the New Zealand government released a subsidy to make electric vehicles cheaper than diesel and petrol cars. Furthermore, the country tries to convert diesel and petrol cars to EVs (electric vehicles).
- According to the China Electric Vehicle Charging Infrastructure Promotion Alliance (EVCIPA), about 632,000 new charging piles of EVs were implemented in January-March 2022 in China.
Existing Restraints
Luxury vehicles are high in cost and not everyone can avail of it, which act as a major restraining factor for the market. Luxury vehicles are equipped with high-end materials, advanced features, and multiple control units, which makes them costly compared to normal cars. Furthermore, these cars require regular maintenance to perform better, which hinders the market.
Emerging Opportunities
Rising demand for full-size luxury cars, due to the increasing technological advancement in the automotive industry is expected to create an immense growth opportunity in the market during the projected period. Car manufacturers are introducing advanced features such as power & heated seats and infotainment systems, which encouraged buyers to switch to full-size luxury cars.
The innovation of flying cars is projected to create lucrative opportunities for the key players competing in the market. Flying car is a combination of traditional automobile and aircraft technology that runs on the roads and flies in the air. It is a solution to the traffic congestion problems. High demand for flying cars from the military and defense for reconnaissance, surveillance, and troop transport is likely to propel the market. Thus, manufacturers are focusing on boosting the production of flying cars to meet the overall growing demand.
- For instance, on June 20, 2023, Japanese automaker Suzuki Motor Corp entered into an agreement with SkyDrive Inc to manufacture flying cars.
Scope of Luxury Cars Market Report
The report includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.
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Attributes
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Details
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Report Title
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Luxury Cars Market - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast
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Base Year
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2022
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Historic Data
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2016–2021
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Forecast Period
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2023–2031
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Segmentation
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Type (SUVs, Sedan, Hatchback, MPVs, and Others), Fuel Type (Electric, Hybrid, and Gasoline), and Propulsion Type (Electric, and Internal Combustion Engine), and Vehicle Class (Mid-Level, Entry-Level, and Ultra-Level)
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Regional Scope
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Asia Pacific, North America, Latin America, Europe, and Middle East & Africa
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Report Coverage
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Company Share, Market Analysis and Size, Competitive Landscape, Growth Factors, Market Trends, and Revenue Forecast
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Key Players Covered in the Report
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JAGUAR LAND ROVER LIMITED; AUDI AG; TOYOTA MOTOR CORPORATION; Dorset Sports Cars Ltd; Volkswagen AG; Tesla; BMW AG; Mercedes-Benz AG; Volvo Car Corporation; and Ferrari S.p.A
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Luxury Cars Market Segment Insights
Type Segment Analysis
Based on type, the luxury cars market is divided into SUVs, sedans, hatchbacks, MPVs, and others. The Sedan segment held a large share of the market in 2022 and is expected to expand at a significant growth rate during the projection period, owing to its high sale and production. Individuals prefer sedans for their comfort and safety, as it provides high performance and is fuel-efficient. The low cost of sedans compared to others is further likely to boost the segment.
Fuel Type Segment Analysis
On the basis of fuel type, the market is segmented into electric, hybrid, and gasoline. The Electric segment is expected to register a robust growth rate during the forecast period, due to the rising awareness among consumers regarding the drawbacks of petrol and diesel. Governments all over the world imposed strict regulations against vehicles that harm the environment. Due to this, individuals prefer electric vehicles. Furthermore, increasing fuel prices at a rapid pace is likely to contribute to the segment growth.
Propulsion Type Segment Analysis
Based on propulsion type, the global market is segregated into electric and internal combustion engines. The internal combustion engine segment held about 71% share in 2022 and is projected to register a considerable CAGR during the projection period, due to the ease of availability, low cost, and high performance. The thermal efficiency of internal combustion engines is higher and it consumes low fuel, which reduces the heat loss in the engine.
Vehicle Class Segment Analysis
On the basis of vehicle class, the market is divided into mid-level, entry-level, and ultra-luxury. The entry-level segment held a large share of the market in 2022 and is expected to expand at a significant growth rate during the projection period, due to its affordable price. The entry-level vehicle refers to the base model, which is equipped with fewer accessories and equipment. This type of vehicle is easy to customize according to customer preference. The rising trend of vehicle customization is further likely to boost the demand for entry-level cars.
Regional Analysis
In terms of region, the global luxury cars market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Europe is expected to dominate the market during the forecast period, owing to the presence of numerous automobile companies and the developed automobile industry with favorable government policies.
The market in Asia Pacific is expected to grow at a rapid pace in the coming years, owing to the rapid expansion of the automotive industry in developing countries such as India and China. China has emerged as a large manufacturing hub for vehicles among all developing countries in the region. Luxury vehicle manufacturers such as Lexus, BMW AG, Mercedes-Benz, Volvo, and Audi hold a substantial share in the Chinese market.
Segments
The luxury cars market market has been segmented on the basis of
Type
- SUVs
- Sedan
- Hatchback
- MPVs
- Others
Fuel Type
Propulsion Type
- Electric
- Internal Combustion Engine
Vehicle Class
- Mid-Level
- Entry-Level
- Ultra-Level
Region
- Asia Pacific
- North America
- Latin America
- Europe
- Middle East & Africa
Key Players
Competitive Landscape
Key players competing in the global luxury cars market include JAGUAR LAND ROVER LIMITED; AUDI AG; TOYOTA MOTOR CORPORATION; Dorset Sports Cars Ltd; Volkswagen AG; Tesla; BMW AG; Mercedes-Benz AG; Volvo Car Corporation; and Ferrari S.p.A
These companies adopt several strategies such as acquisitions, partnerships, collaboration, mergers, R&D, and product launches to boost their market share. For instance,
- In October 2022, Mercedes Benz, Stellantis, Siemens, and Total Energies signed an agreement to create a joint alliance for the construction of three gigafactories in Europe to manufacture electric vehicles.
- In March 2022, Acura launched its new Acura Integra premium hatchback vehicle. The vehicle includes both active and passive safety features with a premium driving experience.
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