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The Luxury Cars Market Forecast size is forecast to increase by USD 180.52 billion, at a CAGR of 6.56% between 2023 and 2028.
The market growth accelerates due to factors such as the increasing demand for premium SUVs, growing preference for safety and comfort, and rising numbers of high-net-worth individuals. These trends reflect consumer priorities and preferences, driving opportunities for manufacturers and dealers in the premium automotive segment. With heightened demand for upscale SUVs and a focus on safety and comfort features, the market anticipates sustained growth momentum. The report provides market size, historical data spanning from 2018-2022, and future projections, all presented in terms of value in USD billion for each of the mentioned segments.
The market caters to ultra-high-net-worth individuals seeking premium transportation options. With disposable income to spare, they are increasingly turning to electric vehicles (EVs), driven by stricter emission standards and the allure of cutting-edge technology. Luxury original equipment manufacturers (OEMs) are meeting customer expectations by offering vehicles that prioritize convenience, perceived safety, and styling without compromising on practicality or performance. Government efforts to promote decarbonization through tax breaks and financial incentives have further boosted electric car sales, making premium brands leaders in advanced technology, fuel efficiency, and connectivity technology for enhanced passenger and driver comfort. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Rising demand for luxury SUVs is the key factor driving the market. SUVs are high-power vehicles with higher seating, ground clearance, center of gravity, and the capability to travel in off-road conditions. They render higher safety due to a large number of safety features, which are standard fitments in such vehicles. North America is the most favorable market for SUVs due to the cheap availability of credit, low fuel prices, and technological advances.
Furthermore, preference for large cars with more seats has been observed across segments (entry-level, mid-segment, and luxury segment). This is one of the factors expected to drive the demand for luxury SUVs during the forecast period. Additionally, the price gap between luxury SUVs and mid-segment SUVs has reduced by almost 10% over the past decade owing to the introduction of multiple models of mid-segment SUVs. Thus, these factors will drive market growth during the forecast period.
The launch of electric luxury car models is the primary trend shaping the market. Electric vehicles are predominantly sedans and hatchbacks. Electric SUVs and crossovers face a challenge because they are bulky and require a significant amount of power to operate. High power consumption also limits the effective driving range of these vehicles. However, advancements in the manufacturing process of electric batteries and a rise in the number of charging stations, especially in developed countries, have raised the confidence of vehicle manufacturers to produce and launch electric luxury SUVs.
Moreover, major premium vehicle manufacturers, such as Horacio Pagani S p A, McLaren Group Ltd., Mercedes Benz Group AG and others are increasingly developing long-range electric cars. In December 2021, the BMW iX all-electric SUV was launched in India. The iX is BMWs first electric vehicle in the country that comes via the completely built unit (CBU) route and has been launched in xDrive 40 guises. Thus, with the growing launch of new electric premium cars, it is anticipated that the market in focus will grow positively during the forecast period.
The global semiconductor chip shortage is a major challenge that affects the market expansion. The chip shortage has pushed carmakers to idle production lines for a long period of time and thus hindered automotive production. For instance, the entire car industry is amid a severe parts shortage, forcing carmakers to halt production and slash exports to various parts of the world. Also, market players such as Toyota Motor Corp. were one of the worst affected in 2022, and thus, production slowed down in Australia.
Moreover, new-car buyers are being urged to get in the queue and order early to avoid delays, as data reveals that the global semiconductor shortage could continue for 2022 as well. Additionally, the semiconductor chip shortage faced by American and European key market players would negatively impact the market since various premium cars are being exported from these regions to other regions. Thus, the aforementioned causes will hamper the growth of the market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
AB Volvo: The company offers luxury cars such as Volvo XC90, Volvo XC90 Onyx Black, and Volvo XC90 Denim Blue.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The executive luxury car segment is estimated to witness significant growth during the forecast period. The executive luxury cars segment is dominated by three German automakers: Volkswagen AG, McLaren Group Ltd, Stellantis NV, and others. These luxury cars are sold globally and are manufactured by either of these manufacturers. Most auto manufacturers have a separate brand for luxury cars. Ultra-high-net-worth individuals with high disposal income choose executive vehicles in the electric vehicles (EV)
The executive luxury car segment was the largest segment and was valued at USD 361.52 billion in 2018. Further, in the luxury original equipment manufacturers (OEM) Mercedes-Benz is expected to dominate the market during the forecast period. The demand for the top variants of mid-segment cars would challenge the entry-level premium cars segment during the forecast period. This cannot be overcome by advanced technologies as the top variants of mid-segment cars have a similar adoption rate of technological advancements to executive luxury cars with passenger comfort and driver comfort. However, it can be overcome by the enhanced brand positioning of luxury brands. Therefore, the segment is expected to grow in the market during the forecast period.
Europe is estimated to contribute 37% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Luxury car models by Mercedes Benz Group AG and Bayerische Motoren Werke AG dominate sales in Europe, prized for their craftsmanship and premium materials. European consumers favor luxurious interiors and superior build quality. Craftsmanship excellence will propel market growth. Additionally, the rising preference for crossovers with heightened ride height and versatility fuels demand. Increasingly, safety features are crucial, with advanced driver-assist systems becoming standard. Fluctuating growth is anticipated due to diesel vehicle regulations impacting CO2 emissions. Intensified competition among car makers spurs frequent new vehicle launches in Europe.
The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
The market remains resilient despite economic fluctuations, with the global economy influencing trends in vehicle type and propulsion type. While internal combustion engine (ICE) vehicles dominate, there's a growing demand for luxury electric vehicles with features like regenerative braking systems. Luxury brands prioritize engineering excellence and offer cutting-edge features alongside high-quality materials and customization options. With advancements like all-electric ultra-luxury SUVs and advanced AWD, manufacturers cater to discerning consumers seeking elegant exteriors and amenities. As consumer confidence and spending power drive market development, luxury carmakers innovate with connectivity technologies and autonomous driving technology, ensuring a seamless blend of design and ergonomics.
Additionally, the luxury car market thrives on high performance and precision engineering, catering to affluent buyers seeking exceptional performance and exclusive features. With a focus on engineered excellence and meticulous craftsmanship, luxury vehicles boast sleek exteriors, fine leather, and wood trim. As consumer demand shifts towards environmentally friendly vehicles, luxury brands incorporate electric and hybrid technologies without compromising on superior performance. Leading luxury car manufacturers like Cadillac introduce innovative features such as adaptive air suspension and active rear steering to enhance driving experiences. Despite economic downturns, the luxury car market continues to evolve with diverse product portfolios and cutting-edge technologies, ensuring a lasting appeal to affluent consumers worldwide.
Market Scope |
|
Report Coverage |
Details |
Page number |
171 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.56% |
Market growth 2024-2028 |
USD 180.52 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
5.5 |
Regional analysis |
Europe, North America, APAC, Middle East and Africa, and South America |
Performing market contribution |
Europe at 37% |
Key countries |
US, China, Japan, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
AB Volvo, Aston Martin Lagonda Ltd., Bayerische Motoren Werke AG, BYD Co. Ltd., China FAW Group Co. Ltd., Dr. Ing. h.c. F. Porsche AG, Ferrari NV, Ford Motor Co., General Motors Co., Honda Motor Co. Ltd., McLaren Group Ltd., Mercedes Benz Group AG, Nissan Motor Co. Ltd., Pagani S p A, Renault SAS, Stellantis NV, Tata Sons Pvt. Ltd., Tesla Inc., Toyota Motor Corp., and Volkswagen AG |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Product
7 Market Segmentation by Propulsion
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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