Key Dynamics

The low oil prices and global macroeconomic factors are affecting the luxury goods market in the Middle East. However, even amidst the economic slowdown globally, the sales of luxury cars per capita are still the highest in the Middle East

The global luxury car market has seen been relatively untouched by the financial crisis and has been posting growth driven by the emerging markets. The three German players BMW, Audi and Mercedes-Benz account for approximately 80 per cent share of the global luxury car market. BMW is the global leader in the luxury car segment, followed by Mercedes- Benz and Audi. World over while mass automobile manufacturers are struggling with margins, high end manufacturers are enjoying steadily increasing sales.

In the United States luxury car market, over the past few years, it is the crossovers and SUVs, which have been experiencing growth in sales. In 2016, the two leading players in the market, Mercedes-Benz and Lexus did not see any of its non-SUV models experience growth in sales. The luxury car market in the US is now diverging into two clear categories, the budget cars and the ultraluxury cars. There is clustering of new purchases in the two extreme categories of budget and ultra-luxury.

Demand for luxury cars in Europe had been at a low for nearly two decades and started recovering gradually from 2014. Even though challenging economic conditions still prevail in many European markets, players such as BMW have been able to maintain volumes of their higher end models. In Europe, there is greater demand for high-end models as compared to the emerging markets such as China where the entry-level luxury markets are seeing greater growth. New players in the market such as Hyundai have big plans for Europe even though traditionally the foreign players have not been able to match the big three German brands which account for approximately four out of five luxury cars in the market.