INDIAN LUXURY AUTO MARKET 2025

Trends, Challenges, and the Promise of GST Reforms

- Sameer Contractor

The Indian luxury auto sector has been volatile in 2025, impacted by several factors. The market has been in a transformative phase, characterised by muted growth, evolving consumer choices, and significant policy changes.

But 2025 is shaping up to be a defining year for the luxury market with a newfound resurgence in consumer interest, product launches, and rationalisation of the GST norms.

Major metro centres like Mumbai and Delhi continued to drive the sales momentum for luxury cars, followed by emerging markets like the NCR, Bengaluru, Chennai, and Hyderabad. Mercedes-Benz recently revealed that the penetration of luxury cars in South Mumbai is on par with developed markets at six per cent, a reflection of the burgeoning affluent population.

The luxury auto sector concluded CY2024 with 51,500 units sold, a record high, with the numbers exceeding the 50,000 mark for the first time. Mercedes-Benz, BMW, and JLR (Jaguar Land Rover) were the top gainers reporting a double-digit growth last year. However, luxury auto brands kicked off 2025 with more subdued demand from consumers. Economic uncertainty, followed by frequent price hikes and geopolitical tensions, meant consumers postponed purchases in the first half of the year. Brands were expected to experience flat or even negative growth in the first few quarters of 2025, following a bullish run in the post-pandemic era.

Approximately, 22,900 luxury cars were sold in the first half of 2025, representing a 1.8 per cent increase over the same period in 2024.