Has Luxury Automotive Peaked in 2024?

2024 has seen mixed results so far for luxury automotive companies, with brands continuing their strong performances (albeit with an ever-shifting business model), others that are stabilising, and others again that are instead going through significant difficulties.

Luxury Automotive Yearly Sales (2019-2024) 

*2024 Projection accounts for Q4
**The Graph Includes sales from Aston Martin, Bentley, Ferrari, Lamborghini, McLaren, Porsche, Rolls-Royce

The graph including the key brands in the space, shows the market's continued growth over the past 8 years averaging over 15% even with the sharp drop due to the pandemic impact which has seen a recovery with results exceeding 2019 levels just a year later.

Winners and Losers

Most brands with generally strong sales figures have seen a significant decline in sales or remained mostly stagnant up to Q3 2024. Specifically, British iconic brands Aston Martin, Bentley, and Rolls-Royce, volumes shrank by 17%, 27%, and 13%  respectively.

Aston Martin is rebuilding its brand and has recently renewed its entire lineup with the latest Vanquish, and the new Vantage following the updated DBX and DB12. With increased average selling price once more, if volumes are delivered, the brand is expecting positive financial results in 2025.

Bentley and Rolls-Royce attribute the slowing sales to challenging market conditions and a calculated slowdown due to renewing lineup respectively.

Porsche (numbers here including only their 911s' sales) and Ferrari remained mostly consistent with just a 2.5% and 0.1% increase, which especially in Ferrari’s case, with improving financial performance, is deliberately limited indicating a continued positive period for the Italian brand, as reported in the previous article New Luxury Automotive: Going Beyond Performance?.

The only ones that saw a strong improvement were the other Italian brand Lamborghini with a +8.6% thanks to the entirely renewed lineup featuring 100% hybridised models Revuelto, Urus SE, and the latest Temerario, and McLaren whose sales grew by 17% although it must be noted that this performance is still part of the brand’s gradual recovery after the 2018 peak and drop in 2020. McLaren too is in a renewal phase with the recent launch of its W1 following the updates with GTS and 750s models.

*New Lamborghini fully hybridised lineup

The projections following the 2024 trend for each brand bring for the first time in several years sales that are smaller in volume than those of the previous one. But what could that mean? Has the industry peaked, is it general economic conditions or there is something more specific going on in the industry?

Wider trends

What is happening in Luxury Automotive could be part of a larger trend in the luxury space. In 2024 in fact, several reports warn of a modest decrease between 1 to 3% in the first 2 quarters of the year, with projections for the close of the year equally cautious, varying between -4% and +4%.

The faltering demand in many sectors is attributed to macroeconomic factors. Rising prices (well documented in luxury automotive) against stagnating GDP in many countries, geopolitical uncertainty with conflicts increasing and public perception more and more divided would all contribute to a crisis that has the potential to affect different sectors in luxury for some time. Part of this ongoing trend is also China. With a 20% downturn the Asian country, which for many brands (and not only in automotive) is by far the largest market, affects negatively the global one. The situation is likely to be exacerbated by the recent US Election and the threat by President Trump of additional tariffs on Chinese goods. So, the more conservative approach toward disposable income might continue into next year as well.

A report from Vogue Business analyses the problem as a loss of sense of belonging among customers toward luxury brands. The value proposition in luxury products accompanied by unique services and customer experience is apparently shifting and not sufficient anymore.

"Brand VIP experiences have become homogenised, which makes the high-net-worth customer value them less" says an industry expert interviewed on the report.

What about Automotive going forward?

The wider automotive market is also struggling globally. S&P Global reports a -18.3% in Europe in 2024 so far, and -12% for the USA. China, on the other hand, in the volume market saw a modest 4-5% increase in the first quarter driven by new subsidies followed by generally uncertain results over the following months. This brought a 2.4% growth overall in the first 9 months of the year, as reported by CAAM.

China Domestic Market Monthly Sales (2022-2024)

*Source: China Association of Automotive Manufacturers

Despite the different dynamics in the two segments, one constant for both is the decline in electric vehicle sales or commitment by some brands. Electrification seemed to be the next step even for luxury automotive, with more groups introducing hybrid models, and some starting with full-electric as well. Additionally, there have been the likes of Rimac, Pininfarina, and a plethora of other startups that started working on highly limited runs of electric hypercars claiming eye-watering performance figures that no ICE performance car ever reached. For a while, these cars looked like the new competitors that legacy brands would have to face and follow if they wanted to avoid being left behind. However, ultimately, consumers chose, and their voice (as a relatively small crowd) was loud. Brands started going back on their strategies and production plans to preserve their internal combustion engines.

Overall this slowdown is most likely caused by a mix of factors listed in this article, and while in business we can’t predict the future by looking at the past, it is possible to interpret the meaning of the current trends in the industry.

The past decade has seen consistent growth in the luxury automotive industry, driven by an increase in wealth in rich countries, with the emergence of new large markets (China ahead of everyone else). Also, the advent of social media, with a culture often based around an exterior image of success, shifted the attention toward material goods, and at the same time, the new wave of young wealthy individuals often coming from these very contexts became an increasingly significant share of buyers for luxury automotive brands. Porsche and many others reported how the average age of luxury car buyers has sharply decreased over the past decade.

The new business model in luxury automotive with cars themselves becoming more and more just a “part” of the whole experience, now enriched by personalisation and exclusive services, has also helped brands increase their margins (again as shown in the previous article) even with sales remaining the same, which in turn helped their exclusivity. But here too, like in other sectors of luxury, the value proposition that customers look for might be changing.

The automotive industry, regardless of the powertrain of choice, is changing and with it its customer base. The “saturation” reached over the past 10-15 years, saw new trends, but brands should ask what is next. A key challenge will be to decide whether to remain flexible and as dynamic as possible to accommodate new preferences and trends or maintain the course focusing on a core product line and strengthening exclusively the brand’s values.

Beyond products and services, in this industry the one constant that keeps proving a key factor for success is brand identity. A brand has to stand for something that consumers aspire to be a part of, whether it is because of its history or its success in motorsport, or its meaning in our wider culture.