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According to reports from The Economic Times, there is a notable surge in affluent millennials and higher-middle-class individuals in India opting to invest in luxury cars.

Data indicates a rise in disposable income among Indians, facilitating a greater willingness to indulge in luxury purchases.

The luxury car market in India saw a record high of 48,931 units sold in 2023, marking a significant increase from previous years.

Rise in Luxury Car Financing:

Banks across India are experiencing a surge in demand for loans aimed at financing luxury car purchases.

Notable banks such as HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, and Kotak Mahindra Bank have reported a significant increase in loans disbursed within this segment.

Approximately 70% of the cost of purchasing a luxury vehicle is being covered through loans, highlighting the reliance on financing for luxury car acquisitions.

Market Dynamics and Financing Trends:

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The luxury car market in India has witnessed robust growth, with sales reaching a record high of 48,931 units in 2023.

Additionally, the pre-owned luxury car market has experienced significant activity, with an estimated 80,000 transactions recorded, excluding consumer-to-consumer deals.

The average ticket size of a loan for a new luxury car is approximately ₹53 lakhs, while for pre-owned luxury cars, it is around ₹30 lakhs.

Veblen Effect and Status Symbolism:

Luxury car ownership is increasingly perceived as a status symbol among affluent Indians, with individuals from higher income brackets leveraging bank loans to finance such purchases.

The Veblen effect, where demand increases with rising prices, has contributed to the allure of luxury car ownership among affluent Indians.

Projected Growth and Market Dynamics:

The luxury car market in India is expected to accelerate further in 2024, driven by aggressive and attractive car financing schemes.

Changing lifestyle preferences among Gen Z and millennials, coupled with increased aspirational values, are expected to further bolster the demand for luxury cars in the coming years.

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Factors Contributing to Growth:

Post-COVID attitudinal shifts have led individuals to prioritize living life to the fullest, contributing to the increased demand for luxury cars.

Increased income levels among young aspirational Indians have also played a significant role in driving the growth of the luxury car market.

Improved access to loans and a desire for aspirational lifestyles have fuelled demand, particularly in Tier 2 and 3 cities, which are emerging as significant contributors to the growth of the luxury car market.

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