The luxury car market lately is seeing a smart uptick. The new age consumers are driven by all sorts of luxuries from comfort to convenience to the best entertainment and safety features coupled with advanced technology like ADAS, the latest electrification ado, and so on. The subtle shift from the need to wanting a premium car backed by the big brand names is the reason behind the steady growth of the segment.
The sales of luxury cars continue to grow in terms of generating profits or the cognitive urge that ends up with a purchase decision. Here’s why:
Luxury has become a global trend
Witnessing the shifts in the geographical formulation, the non-traditional markets have picked up momentum. According to a McKinsey report, the Asia-Pacific region is expected to have the highest growth graphs between 2021 and 2026, propelled by the increasing number of ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs).
Predictions put the percentage growth in the UHNWI population in Asia at 33 per cent compared with 28 and 27 per cent in the United States and the European Union, respectively. Growth trends in the HNWI population should exceed those of the UHNWI cohort, increasing by more than 60 per cent in Asia compared with less than 53 per cent in the European Union and the United States between 2021 and 2026.
EVs and e-SUVs becoming the dominant factor across top luxury tiers
Battery-electric vehicles will be dominant across all luxury-segment tiers by 2031. Consumers today are very open to sustainable alternatives and research indicates that EVs are highly in vogue among affluent customers. The adoption rate will however vary, considering the price aspect of the vehicle. Global figures suggest that more than 70 per cent of current owners of premium and luxury internal-combustion-engine (ICE) vehicles are willing to switch to EVs during their next vehicle purchase, as per the report.
The demand for SUV has been constant across segments, and the trend is not going to go away anytime soon. SUVs are also becoming more practical in a way that they getting electrified. In terms of share, SUV sales are likely to increase from less than 25 per cent to 40 per cent between 2021 and 2031. Meanwhile, the shares for other popular segments such as sedans and sports cars will probably fall to 20 and 40 per cent, respectively, in 2031, from 25 and 50 per cent in 2021, the report suggests.
As many wealthy buyers desire greater resilience given the broadening regional applicability of SUVs, around 50 per cent of premium- and luxury-car buyers prefer SUVs as their next purchase, the report adds.
Go-to-market evolving a more consumer centric approach
Living in the ever-evolving times, managing continual engagement and personalised experiences for the customers is a must for any and every industry. Nothing like clubbing luxury and an exclusivity!
Luxury OEMs have understood the importance of giving end-to-end customer experiences unlike the traditional franchised-dealerships which lacked the seamless omnichannel experience which results in unconvinced customers. Research has shown that fewer than 2 per cent of customers consider the dealer approach in market segments to be “ideal.”
With the luxury OEMs having created a go-to-market approach, results have started changing and it is no surprise, then, that adopting the direct-to-customer approach and actively innovating to meet evolving customer needs has brought a return on sales by more 5 per cent. McKinsey’s analysis reveals that a leading EV specialist using a DTC go-to-market model spends about half as much in terms of cost of sales compared with an incumbent OEM.
Wealthy consumers and luxury market; an agelong bond
The fact that the increase in more millionaires (and billionaires) will affect the sales growth nexus for sure. The growth network for luxury automobiles that is now taking a new route from North America and Europe to Asia and the Middle East with the strong geolocation and technology shifts indicates a demand for the high-ticket automobiles which in turn is attracting new entrants in the luxury market. Report analysis suggests that the growth in luxury-car segments will vary by price band, with higher price brands seeing somewhat more growth.
Bringing forth the up-to-date luxury car brand
The 21st century luxury cars need to evolve as quickly as they could and this calls for learning from the competitors. Keeping pace with what the market demands is no more going to work, as it is the age where the automotive players have to think one step ahead of what they intend to do and set benchmarks for the others. Customisation-Class-Coherence and a mix of experiential diversity is what calls for the success of the luxury car market.
The luxury car business, as per the report has documented 20 per cent improvements in customer satisfaction and 10 to 15 per cent increases in sales conversion performance. Employees embrace it, too, with companies seeing 20 to 30 per cent increase in employee engagement, and the process tends to be labor neutral or better.
Managing to set itself apart from the mass market, the luxury sector continues to make profitable growth, despite all the undulations.