India's luxury car market share remains at 1% as mainstream brands enter premium segment

Synopsis

India’s luxury car market remains around 1% of passenger vehicle sales, but competition is widening as brands such as Toyota, Kia, MG and BYD have entered the premium segment with high-priced models.

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Mumbai: India’s luxury car sales volume remains stuck at around 1% of the passenger vehicle market, as affluent buyers look beyond the traditional marquee brands.

The top end of the market has become crowded, with automakers that do not traditionally carry a luxury tag such as Toyota, Kia, MG and BYD bringing high-priced premium models and taking away a section of potential customers who would have otherwise chosen the likes of Mercedes-Benz, Audi or BMW. Data collated by automobile consultancy Jato Dynamics show a marginal fall in the market share of legacy luxury automakers so far in calendar 2026, to 0.98% from 1.1% in 2025, even as the premium model range of mainstream and new-age brands grew their share to 0.14% from 0.12%.

The traditional luxury brands are now pursuing different routes for growth.

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Mercedes-Benz is moving further up the price ladder, while BMW is looking to widen the luxury offering with more products, electric vehicles, localisation and customers upgrading from mainstream brands, said their executives.

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Mercedes-Benz India is targeting growth in value market share. Its average selling price has increased to about ₹1 crore over the past couple of years from around ₹60 lakh.

“We should not be looking at luxury growth from the prism of absolute volume and penetration alone, but from the quality of sales and value it adds,” said Santosh Iyer, managing director and CEO at the Indian unit of the German automaker.

Its top-end portfolio grew 20% in the first half of 2026 and accounts for 30% of sales. The company said it is seeing an increasing number of younger, first-time buyers.

BMW is targeting expansion from another direction.

Eye on EVs

Long-wheelbase products and electric vehicles are emerging as important growth areas for the company, BMW India CEO Hardeep Singh Brar. EVs now account for 26% of its sales, up from 8% two years ago, he said. Around 40% of its customers upgrade from non-luxury cars, while a similar proportion comes from other luxury brands, the company said.

According to Ravi Bhatia, president of Jato Dynamics India, the contrast in the strategies of Mercedes and BMW — one see-king to increase the value proposition while the other targeting areas like EVs to boost sales — explains why the 1% figure does not tell the whole story.

“Luxury can grow upwards without widening its ownership base at the same pace,” Bhatia said. Higher spending, customers changing brands and households buying their first luxury car are different sources of growth, he said. Beyond the traditional luxury marquees, the competitive set is widening further. In a group of cars that Jato selected for comparison, the high-priced models from mass-market manufacturers had a weighted average retail price of Rs 1.19 crore, compared with Rs 91.3 lakh for the traditional luxury brands.