India’s 1% luxury car club is getting crowded

Mumbai — India's luxury car sales market is currently holding steady at approximately 1% of the passenger vehicle market. Despite this, the upper echelon of the luxury segment is becoming increasingly congested. Automakers that typically do not belong to the luxury category, such as Toyota, Kia, MG, and BYD, are introducing high-end premium models, thus capturing a share of potential customers who would have otherwise opted for luxury brands like Mercedes-Benz, Audi, or BMW.

According to data from automobile consultancy Jato Dynamics, the market share of established luxury automobile manufacturers has seen a slight decline to 0.98% in 2026, down from 1.1% in 2025. Meanwhile, mainstream and emerging brands are expanding their premium model offerings, increasing their market share to 0.14% in 2026 from 0.12% in 2025.

Traditional luxury brands are exploring different avenues for growth. Mercedes-Benz India is focusing on expanding its presence in the value market, with an average selling price rising to around ₹1 crore within the past couple of years from approximately ₹60 lakh. The automaker's top-end portfolio has grown by 20% in the first half of 2026 and now accounts for 30% of its sales.

Santosh Iyer, the managing director and CEO of Mercedes-Benz India, emphasized that growth should be evaluated based on the quality of sales and added value, rather than solely focusing on absolute volume and market penetration.

On the other hand, BMW is pursuing expansion through different strategies. Hardeep Singh Brar, the CEO of BMW India, highlighted that long-wheelbase products and electric vehicles (EVs) are emerging as key growth areas for the company. Currently, EVs account for 26% of BMW's sales, up from 8% just two years ago. About 40% of BMW's customers upgrade from non-luxury cars, while a similar proportion comes from other luxury brands.

Jato Dynamics India's president, Ravi Bhatia, pointed out that the strategies of Mercedes and BMW differ significantly. While Mercedes is aiming to enhance the value proposition, BMW is targeting areas such as EVs to boost sales. This difference in approach explains why the 1% figure does not provide a complete picture of the luxury car market. Higher spending, customers changing brands, and households purchasing their first luxury vehicle are all contributing to growth in the luxury segment.

Moreover, when examining a group of high-priced models from mass-market manufacturers, the weighted average retail price stands at Rs 1.19 crore, compared to Rs 91.3 lakh for traditional luxury brands.