In charts: Luxury cars continue on cruise lane this year

The positive sentiment is evident from vehicle registrations data as well. (Companies record sales when they move vehicles to a dealer, regardless of whether they are sold. This makes registrations a better measure of demand.) About 24,000 luxury cars have been registered so far this year, with three months still to go, shows government data. If the pace holds, the year will end with about 32,500 registrations, close to the 2018 record. It could be even more. In 2022 about 27% of luxury cars were registered in the December quarter, which coincides with the festive season in India.

Three movements are shaping the ongoing expansion. The first is the steady growth of the leading troika—Mumbai, Bengaluru and Delhi. The second is the expansion in office hubs such as Gurugram (ranked fourth in 2022, with a 78% increase in registrations since 2014) and Noida (ranked ninth, up 47%). The third is relatively small districts with sizable markets showing a strong uptick.

The 100 barrier

This is not episodic demand. Take Shimla, for instance. Between 2014 and 2017 the district clocked 15 luxury car registrations a year. Between 2018 and 2022, it averaged 125 a year. Similarly, Ranchi has sped from an average of 25 from 2014-2016 to an average of 97 in 2021-2022. While there are new pockets of growth, the market for luxury cars in India remains concentrated in 60-80 districts, which account for over 95% of total sales.

For luxury-car manufacturers the covid-19 pandemic was a huge setback, slowing down current sales and future expansion, but they are now firmly back on the growth track. For example, only 34 districts saw at least 100 luxury car registrations in 2020, down from 49 the previous year. By 2022, the number had recovered to 43 districts. This year it stands at 38, with 11 more districts within 20% of 100 registrations at the onset of the festive season.

Pathways to growth

There are 13 districts that have posted at least 50 luxury-car registrations in 2023 (as 27 September) and whose total for nine months of 2023 exceeds their total for all of 2022. These cover a wide range of market sizes. At the top end there’s Pune, which ranks five on luxury car registrations and could test its best-ever levels, achieved in 2017. At the other end are Cuttack and Mohali.

That the market for luxury cars is expanding is irrefutable. There’s expansion by geographies and by customer profile, with more salaried people choosing to splurge. Lastly there’s also expansion in the used-car segment, where luxury-car manufacturers refurbish and certify their own cars. Audi, for example, recently opened its 25th pre-owned facility to go with its 29 new-car showrooms.

Mercedes moves

From new models to more affordable prices via used cars, luxury carmakers are back on the charge. Registration data for four of the five top manufacturers shows that they should sail past their 2022 totals. With three months left in the year Jaguar Land Rover, which is ranked fourth on market share in the luxury car segment, is already 20% above its 2022 levels. Three others are 19% to 23% below their 2022 totals and should cross them.

Since 2014 at least, Mercedes-Benz India has been the leader in the segment. In the early years of this period Audi was number two but it has since been leapfrogged by BMW. After these three, there’s a significant drop to Jaguar Land Rover and Porsche. For now, as they enter the festive season, they will have all engines firing.

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