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Europe Luxury Car Market

PMR Projects a Robust Growth Outlook for Europe’s Luxury Car Market, Examining Strong Consumer Demand, and Shifting Preferences Towards High-Performance and Luxury Vehicles.

Luxury Car Market Size and Share Analysis

The Europe luxury car market is estimated to value at US$287.7 Bn by the end of 2031 from US$160.5 Bn anticipated in 2024. The market is expected to secure a CAGR of 8.7% from 2024 to 2031.

Market Attributes

Key Insights

Europe Luxury Car Market Size (2024E)

US$160.5 Bn

Projected Market Value (2031F)

US$287.7 Bn

Europe Market Growth Rate (CAGR 2024 to 2031)

8.7%

Historical Market Growth Rate (CAGR 2019 to 2024)

7.2%

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Market Introduction and Trend Analysis

The Europe market for luxury cars includes automobiles that offer superior quality, performance, comfort, equipment, amenities, and status when compared to standard automobiles. These vehicles frequently have cutting-edge technology, premium components, and superb craftsmanship.

Europe is the most significant shareholder in the global market and is expected to grow at a CAGR of 8.7% during the forecast period. The market is anticipated to be dominated by Germany, the UK, and several other important nations due to the increasing actions of major companies throughout the nation and their various strategies, including product releases and expansion.

Luxurious manufacturers are making significant investments in electric vehicle technologies. Established luxury manufacturers have been prompted to offer their electric vehicles as the likes of Tesla are setting new standards. The overall economic environment, and consumer confidence directly influence the luxury car market of Europe.

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Historical Growth and Course Ahead

The market for luxury car is mainly driven by factors such as the increasing adoption of electric and hybrid vehicles, the dominance of luxury SUVs, technological advancements, and evolving consumer preferences.

While hampered by challenges such as intensifying competition, and regulatory pressures, European luxury car manufacturers have continued to innovate and expand their market presence, positioning themselves for future growth in the evolving automotive landscape.

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Key Trends and Innovations in the Market

  • Increasing demand for electric and hybrid vehicles
  • Advanced driver assistance systems (ADAS)
  • Increasing adoption due to car safety technology
  • Preference for more personalized options

Luxury cars are becoming more popular because people are seeking fancy cars with features like sophisticated technology that facilitates driving and safety. One big trend is electric cars that are gaining the highest popularity in the luxury market.

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Key Growth Drivers

Technological Advancements

Luxury cars are getting better and cooler all the time because of new technology. Luxury car brands spend a lot of money on making their cars more high-tech. They add fancy features that make driving safer, easier, and more fun. Things like automatic driving help, where the car can almost drive itself, or cool safety systems that keep you and your family safe on the road. All these gadgets make owning a luxury car more exciting and make driving a luxury car an amazing experience.

One significant driver of growth is the integration of electric and hybrid powertrains. As sustainability becomes increasingly important to consumers, luxury car manufacturers are introducing electric and hybrid models that combine high performance with eco-friendly credentials. These cars appeal to environmentally conscious consumers who seek luxury without compromising on their values.

Furthermore, the integration of connected car technologies transforms luxury vehicles into sophisticated mobile hubs. Features such as seamless smartphone integration, voice-activated controls, and over-the-air updates provide drivers with unprecedented convenience and connectivity on the road. In essence, technological advancements not only elevate the performance and prestige of luxury vehicles but also cater to evolving consumer preferences, driving sustained growth in the market.

Stricter Emissions Standards, and Changing Regulatory Environment

Growing regulatory constraints, especially regarding emissions requirements and environmental restrictions, are a hindrance to the expansion of the luxury vehicle market. The increasing emphasis on environmental sustainability by governments across the globe has forced luxury automakers to allocate resources towards the development and production of cars that meet increasingly strict emissions regulations.

The shift to more environmentally friendly technology, such electric and hybrid drivetrains, comes with high R&D expenses that affect the luxury market's profitability and price structure.

Factors Impeding the Market Growth

Shifting Regulatory Landscape, and Stringent Emissions Standards

The market for luxury vehicles is constrained in its expansion by an ever more restrictive regulatory environment, especially with regards to emissions standards and environmental restrictions. The increasing emphasis on environmental sustainability by governments across the globe has forced luxury automakers to allocate resources towards the development and production of cars that meet increasingly strict emissions regulations.

The shift to more environmentally friendly technology, such electric and hybrid drivetrains, comes with high R&D expenses that affect the luxury market's profitability and price structure.

Volatile Market Conditions

The market for luxury cars is significantly constrained in its growth by economic instability. Recessions, exchange rate fluctuations, and geopolitical unrest can all have an adverse effect on luxury car sales by lowering consumer confidence and discretionary expenditure.

Economically affluent customers may decide to put off or reduce their purchases of luxury cars during uncertain economic times because they value stability over extravagance. Additionally, a decline in the market for high-end car products may result from diminished consumer buying power brought on by job losses or income stagnation.

Future Opportunities for the Luxury Car Companies

Sustainable Luxury

The trend towards sustainability on a worldwide scale offers luxury manufacturers a significant chance to reinvent and invent the definition of luxury automobiles. The need for luxury cars with eco-friendly features and opulence is rising as consumers become more concerned about the environment.

The creation and use of premium electric and hybrid vehicles provide a big opportunity. Luxury manufacturers may satisfy environmentally aware consumers while upholding the performance and grandeur associated with their brands by investing in EV technology.

Electric luxury cars appeal to a discerning customer looking for eco-friendly yet opulent transportation solutions because they provide zero-emission driving without sacrificing design, comfort, or state-of-the-art technology.

Digital Transformation

The market for luxury cars stands to benefit greatly from the digital revolution, which will allow manufacturers to redefine luxury for the modern day and improve the customer experience. Modern consumers are drawn to immersive and individualized experiences, which luxury automakers can offer with the help of developments in connectivity, artificial intelligence, and digital interfaces.

The incorporation of cutting-edge connection capabilities and digital ecosystems into luxury automobiles is a significant opportunity. Digital connectivity raises the bar for luxury car owners' driving experience by improving convenience, enjoyment, and productivity through anything from smooth smartphone integration to advanced infotainment systems.

Category-wise Analysis

Category

Projected CAGR through 2031

Vehicle Type – SUV

9.9%

Propulsion – Electric/Hybrid

9.5%

SUVs Continue to be the Bestseller Category

The SUV segment accounted for the significant market share and is likely to maintain its dominance during in the forthcoming years recording a CAGR of 9.9%. SUVs are predicted to dominate the European premium car market. Conventional passenger cars are becoming less and less popular. It is a worldwide craze that originated in the US and moved to Europe and Asia. European consumers can purchase top-selling SUVs from Nissan, Hyundai, Kia, Mazda, Mitsubishi, Jaguar, Lexus, Porsche, Maserati, and Volvo, among other brands.

To see higher sales figures, most of European luxury manufacturers have recently moved toward crossover SUVs. A majority of premium brands accessible today have stated that SUV sales account for more than 75% of their total volume.

In addition, it has been anticipated that the SUV market will grow rapidly due to shifting consumer preferences for larger, more opulent cars. The emission regulations in the EU, where automobiles account for about 12% of all carbon dioxide (CO2) gas emissions, are a significant contributing factor to the abrupt increase in the manufacturing of SUVs.

Electric/Hybrid Vehicles Set to Explore Excellent Prospects

The growth of electric and hybrid vehicles in the luxury car segment is poised to be particularly notable due to several driving factors, including technological advancements, shifting consumer preferences, regulatory pressures, and the strategic initiatives of luxury car manufacturers.

Electric/hybrid luxury car are estimated to expand at a CAGR of 9.5% in terms of value in the forthcoming years. Luxury brands are well-positioned to lead this transformation, offering high-performance, sustainable, and innovative vehicles that meet the evolving demands of their customers.

Country-wise Analysis

Country

CAGR through 2031

Germany

8.3%

UK

9.1%

Germany to Account for the Significant Share in the Luxury Car Market

Germany is home to some of the world's most prestigious and iconic luxury car brands such as Mercedes-Benz, BMW, Audi, and Porsche. These brands are synonymous with quality, innovation, and performance, which appeal to affluent consumers globally.

Germany's leadership in the luxury car market is a result of its commitment to innovation, engineering excellence, and a deep understanding of consumer preferences. This combination of factors ensures that German luxury car brands remain highly competitive and sought after in the Europe market.

UK to Exhibit Notable CAGR in the Europe Luxury Car Market

The UK market is projected to secure a CAGR of 9.1% in the forecast period from 2024 to 2031. The UK government’s push towards electric vehicles, including incentives for EV purchases and investments in charging infrastructure, aligns with the strategic direction of many luxury car manufacturers. Brands like Jaguar, Bentley, and Rolls-Royce are investing heavily in EV technology, which appeals to environmentally conscious consumers.

There is growing demand for luxury car in the UK with the rise in urbanization and changing lifestyles have led to a greater appreciation for premium cars. As more people move to urban areas, the demand for vehicles that offer comfort, advanced technology, and superior driving experiences increases.

Competitive Landscape Analysis

Acquisition, and partnership in the development of the innovative products and the expansion of production capacities are the key growth strategies followed by the key players in the market. The market for luxury car is characterized by a high level of competition among established automakers, each striving to attract affluent consumers through a combination of brand prestige, innovative technology, superior performance, and opulent design.

Top Industry Players Profiled

  • Tesla Inc.
  • AB Volvo
  • Audi AG6
  • BMW AG6
  • Ford Motor Company
  • Fiat Chrysler Automobiles
  • Meredes-Benz Group AG
  • Hyundai Motor Company
  • Rolls-Royce Holding PLC
  • Bentley Motors

Recent Developments in the Luxury Car Market

  • In March 2024, High-end American electric vehicle manufacturer Lucid has expanded into Europe, operating a small number of stores in Germany, Switzerland, the Netherlands, and Norway. With the opening of four new locations in Germany and the release of the Air Pure rear-wheel drive entry model, which will cost roughly €85,000. Lucid intends to significantly boost the number of cars sold in 2023 after it was around 150.
  • In September 2022, MG Moter Launched MG4 Electric in Europe with prices starting from € 28,990*.

Europe Luxury Car Market – Report Scope & Segmentation

Attributes

Details

Forecast Period

2024 to 2031

Historical Data Available for

2018 to 2023

Market Analysis

US$ Billion for Value

Key Countries Covered

  • Germany
  • France
  • UK
  • Spain
  • Italy
  • Russia
  • Rest of Europe

Key Market Segments Covered

  • By Vehicle Type
  • By Propulsion
  • By Component
  • By Country

Key Companies Profiled in the Report

  • Tesla Inc.
  • AB Volvo
  • Audi AG6.
  • BMW AG6.
  • Ford Motor Company
  • Fiat Chrysler Automobiles
  • Meredes-Benz Group AG
  • Hyundai Motor Company
  • Rolls-Royce Holding PLC
  • Bentley Motors

Report Coverage

  • Market Forecast and Trends
  • Company Share Analysis
  • Competitive Intelligence
  • DROT Analysis
  • Market Dynamics and Challenges
  • Strategic Growth Initiatives  

Customization & Pricing

Available upon request

Europe Luxury Car Market Segmentation

By Vehicle Type

  • SUV
  • Sedan/Hatchback
  • Sports/Super Luxury Cars

By Propulsion

  • Electric/Hybrid
  • ICE

By Country

  • Germany
  • France
  • UK
  • Spain
  • Italy
  • Russia
  • Rest of Europe

- Companies Covered in This Report -

- Frequently Asked Questions -

Economic growth in many countries has led to increased disposable incomes, especially among affluent individuals. This rise in wealth enables more consumers to afford luxury vehicles.

Some of the key players operating in the market are Tesla Inc., AB Volvo, Audi AG6., and BMW AG6.

The SUV segment recorded the significant market share.

Increasing demand for growth of electric vehicles (EVs) in the luxury segment are estimated to present opportunities for the market players.

Germany held highest share in the market for luxury car in Europe.

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