TL;DR
India's luxury car sales grew by only 1.6% in 2025, the slowest since the pandemic, due to economic uncertainties despite overall passenger vehicle market boom.
The luxury automobile segment in India recorded its slowest growth since the pandemic in 2025, with sales expansion decelerating to a mere 1.6% year-on-year. This subdued performance contrasts sharply with the overall passenger vehicle market, which is projected to expand by 10.5% to a record 4.6 million units. Industry experts attribute the slowdown in luxury car sales to geopolitical uncertainties, unstable stock markets, and cost pressures arising from a depreciating rupee.
Despite a reduction in GST rates on automobiles, which brought luxury vehicles from 43-50% to a 40% GST rate in September 2025, the demand from affluent buyers was impacted by turbulent equity markets. Mercedes-Benz, BMW, and Audi, which collectively command approximately 85% of the luxury vehicle market in India, experienced this moderation. However, industry leaders anticipate a return to sustainable growth in 2026, buoyed by the full-year effect of GST reforms, consistent policy, and improved macroeconomic stability.
