Luxury car sales expected to surge during festive season

After a muted first half, luxury carmakers are expecting demand to pick up with the start of the festive season in the ongoing quarter.

Santosh Iyer, Managing Director at market leader Mercedes Benz India told ET, while geopolitical uncertainties slowed down demand in the local market earlier on in the year, the company is expecting better momentum with the onset of the festive season.

“In our segment, purchases are sentiment-driven. While there ate geopolitical challenges, the RBI has cut repo rate by 100 basis points this year. We are at the start of the festive season. We expect the momentum to improve”, he said. Industry watchers expect about 10,000-12,000 luxury vehicles to be sold in the festive season this year.

Iyer said the company itself has 1,500 pending orders. At the higher-end of the market especially the company is seeing good traction. He informed, “Our top-end vehicles are growing by 15-20%. The core segment is also doing well. It is only at the entry-level, where we have limited presence that we are seeing some impact on volumes.”

Mercedes Benz India posted a growth of 10% to sell 4,238 units last quarter when overall luxury car sales in the domestic market rose by 5-8%, industry sources said.

Balbir Singh Dhillon, Head at Audi India, agreed,As an industry, we are facing headwinds as slowing demand—driven by price increases from a weakening exchange rate and heightened market uncertainty amid evolving geopolitical tensions—continues to impact performance.However, at Audi India, we remain confident of growth in the forthcoming months.”

For the entire calendar year though, given the high base - 54,000 units in 2024 - luxury vehicle makers expect sales to grow in single-digits. In 2024, luxury car sales grew by about 8% to 54,000 units.

Luxury cars currently have a little over 1% market share in India—the lowest among major economies. The country, however, offers ample growth potential in the medium to long-term given it is home to one of the highest number of billionaires worldwide, industry experts said.