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High-end cars priced above Rs. 50 lakh are expected to finish the year at around 52,000 units with a growth of just about 1.6 per cent
Even as India’s passenger vehicle industry pushes towards record territory in 2025, the luxury end of the market has moved in the opposite direction. High-end cars priced above Rs. 50 lakh are expected to finish the year at around 52,000 units with a growth of just about 1.6 per cent. It stands in contrast to the more versatile PV market which is forecast to expand by over 10 per cent to nearly 46 lakh units.
The imbalance is striking given that luxury vehicles continue to contribute only a little over 1 per cent of total car sales despite the country witnessing one of the fastest expansions of high net-worth individuals globally. The muted performance can be traced to a combination of economic and sentiment related constraints.
Unpredictable stock market movements, ongoing geopolitical tensions and a steadily weakening rupee have made premium buyers more cautious with discretionary spending. Since luxury vehicles are heavily dependent on imports and global supply chains, rising costs have further limited pricing headroom. Industry leaders also acknowledge that the post-pandemic surge in demand was bound to normalise – making a period of consolidation inevitable rather than alarming.
Policy changes, however, have started reshaping the outlook. In September 2025, the government rationalised automobile GST rates, cutting the levy on luxury cars to 40 per cent from earlier levels that stretched up to 50 per cent. While this reduction has not triggered an immediate spike in volumes, automakers believe it provides clarity on a longer run and reduces ownership friction.
It should create a more stable foundation for demand recovery over the next few quarters.
Despite the slowdown, competition at the top remains heavily concentrated. Mercedes-Benz, BMW and Audi together command nearly 85 per cent of the luxury car market. Mercedes-Benz has pointed to supportive tax reforms helping offset forex burdens, BMW has cited stronger enquiries and a growing order backlog after the GST revision.
Audi, on the other hand, continues to adopt a cautious but optimistic stance – banking on improved currency stability, infrastructure upgrades and a more mature buyer demographic. What amplifies the contrast is the strength of the mass market where sales accelerated tellingly in the latter half of the year following an early slowdown.
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