Asia Pacific will become the winner in luxury car growth
Global sales of luxury cars saw yet another year of strong growth. Global wealth expansion is evidently going much further than just personal luxury goods with luxury cars clearly benefiting. Thanks to a combination of this growing prosperity teamed with changing consumer habits; the luxury car market is experiencing more opportunities across a wider range of geographies, reaching both developing and emerging markets.
Luxury car sales weigh heavily on China’s performance
China alone accounts for almost 32% of overall global value sales of luxury cars – three percentage points more than 2016 figures which stood at nearly 29%. This places China well ahead of the world’s second-largest luxury car market, dethroning the US as the traditional epicentre of vehicle demand.
In fact, China’s luxury car sales have been so strong that leading luxury brands such as Lamborghini and Maserati witnessed their best ever year in terms of sales growth in 2016, with 2017 looking very promising. The Asian luxury powerhouse was also in the top five markets in terms of percentage value sales growth. However, in actual volume terms, China accounts for almost 286,000 of the additional 420,000 luxury cars sold over the 2016-2017 period, adding USD21.6 billion to global luxury car mix.
Chinese chooses German luxury cars over home-grown marques
Source: Euromonitor International
India is in driving seat for future sales growth
India is the world’s fifth largest market in terms of actual passenger car sales in volume terms across all price segments, with luxury cars accounting for just 1% of vehicles sold in 2017. However, car manufacturers, both in the luxury and non-luxury segments, see huge potential for sales growth in the country and are looking to invest further in this fast-growing market.
Indeed, value sales of luxury cars in the market are set to rise by almost 100% over the period to 2022, making India the fastest growing future market in the world. Whilst these percentage increase figures in value terms may look impressive, in volume terms India is set to be the second-fastest growing market behind China, with 71% growth over the same period, putting an additional 23,547 luxury cars on the road by 2022.
Asia leads the race to be world’s biggest car producer
To drive this growth and demand in China and India, vehicle production increased dramatically over the past five years in these markets. In China as well as India, car makers can avoid hefty import duties by manufacturing locally, thus reducing the overall cost of buying a luxury car and widening the consumer reach. This shift has affected automakers ranging from mainstream to luxury. At the premium level, luxury car makers including BMW, Mercedes-Benz and Jaguar are all producing an increasing number of vehicles in Asia.
Demand in Asia is expected to continue in short to medium term, with passenger car production in China and India increasing by 44% and 22% respectively by 2030, and with four Asian markets remaining in the world’s top 10. Another region to watch is Latin America, with Mexico of particular note. Already in the world’s top 10 manufacturing markets, production in Mexico is set to increase by 25% over the same period.
Asia Pacific clear winner in wealth expansion to drive luxury car growth
Source: Euromonitor International