According to Frost & Sullivan the Global Luxury Vehicle Market is expected to grow from around 5 million cars today to around 10 million cars globally by 2020. This growth is likely to concentrate on the compact segments with 1.4 million cars today growing to 2.6 million cars globally by 2020 as well as the SUV segment with 1.6 million cars today forecast to grow to 2.3 million cars produced globally by 2020.

The company’s research shows that the UK market is the only European market to have experienced positive growth in 2012 and adds that the US market finds itself in a rebound post recession with buoyant customer confidence. China however, is likely to overtake the US success story by 2015.

‘Baby boomers are the biggest customer group and represent 58% of Merc customers for luxury cars in the North American market,’ said Frost & Sullivan automotive & transportation consultant Niranjan Thiyagarajan. ‘Millennium customers on the other hand are expecting entry-level luxury cars that offer unparalleled technology and connected services. This has been made evident by plans from luxury makers Daimler and BMW to introduce the CLA sedan and 3 series models at $ 33,000.’

Generation X and Y customers in emerging markets such as China, India and Latin America are focusing on compact sporty vehicles.

‘The largest selling model for Jaguar Landrover has been the Evoque with close to 95,000 in 2012,’ Mr Thiyagarajan continued. ‘This also means luxury car makers will be hit by lowered profit margins for smaller cars. On the other hand large SUV’s like the Porsche Cayenne have been a massive success prompting manufacturers such as Bentley, Lamborghini and Maserati to consider introducing similar models.’ There has been a polarisation in the size of vehicles preferred by premium customers.

China remains the most important market despite government austerity policies restricting the purchase of luxury cars for its fleets. This is only a momentary lapse and not expected to halt the luxury market which will grow quicker than the automotive market itself. GM is building its Cadillac plant in Shanghai while Honda plans to introduce Acura cars in China by 2016.

‘Despite the effects of the double dip recession the luxury car market remains unaffected and a number of native players from the Chinese and Russian market are expected to enter the scene,’ concluded Mr Thiyagarajan. ‘Connected living and health, wellness and well being are key USPs that OEMs are expected to differentiate themselves on.’