Automotive Luxury Market in 2022: The Growth Continues

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The luxury automotive sector showed significant resilience over 2020 as the Covid pandemic broke out. While the wider sector has been faltering in its recovery, the luxury segment kept growing in the following year and in 2022 as well. Along with the general growth though there are other interesting dynamics that can be observed.

Larger volumes

The top-end of the segment, driven by a few extremely successful brands, has registered yet another growth year, increasing over 2021 by about 9%, and a further 3% the next one as displayed in the graph below. The larger automotive sector instead despite a sizeable improvement in 2021, almost stagnated in 2022, with the main cause for delays and bottlenecks still being the shortage of semiconductors.

Luxury Automotive Market Sales Volumes (2018-2022)


The main contributor to this success over the past two years has been the continued growth of brands like Bentley, exceeding 15,000 yearly sales for the first time in its history, Ferrari (13,221), Lamborghini (9,233), and Rolls-Royce (6,021) all posting record results. Other OEMs such as Aston Martin, Porsche, and Maserati (still on the path of recovery) instead have been consistent while probably not exceeding expectations. Finally, more niche brands still going strong like Pagani, Rimac, Koenigsegg, and the likes also contributed albeit with very low numbers. Of the public companies in the segment only McLaren, which has not published its full-year figures (and is accounted for here with an estimate), will likely report a drop in sales since it stood at -13% in Q3 YOY.

Reflecting the general health of the segment is the market size evaluated at €566 billion.

Luxury Automotive Market Value (2018-2022)

value market

Evolving market trends: prices and personalisation

The most interesting data that emerges from these reports though is that while the value of the market has not only recovered but exceeded the record of 2019, sales numbers haven’t.

This is reflected by the growth numbers of various companies in the segment. While for all these the sales numbers have increased, both revenues and operating profits reached much higher growth suggesting an overall improvement in efficiency, and most of all a trend already seen over quite a few years: the general increase of luxury vehicle prices.

2022 Luxury OEMs with the largest revenue and operating profit growths

table growth

This increase in average selling price (ASP) takes different forms.

In 2022, Aston Martin boasts a 26% increase in ASP exceeding the £200,000 mark. This has been mainly thanks to the destocking efforts over the past few years.

In other instances, the base price of production models has comparatively increased, either because of new technologies or because they represent new additions to a lineup, as is the case for Ferrari’s SF90 Stradale and Purosangue. The first is priced at £379,000, while the latter specifically substituting the GTC4 Lusso, introduced in 2016 and sold at a price of around £243,000, is offered now at a starting price of £313,000. This trend is observable in pretty much every other luxury car manufacturer, with even more extreme examples in super low-volume ones such as Pagani.

Last but not least, the other important trend that is common to all these companies and represents an important and increasing source of revenue is personalisation. Every luxury OEM over the last 10-15 years has introduced and gradually expanded its bespoke program. Over the last two years, most OEMs quote bespoke and coachbuilding programs as major contributors to the sudden increase in revenues and profits.

The luxury market keeps evolving and, as mentioned previously in the article Tailor-made: What luxury car customers can't go without, the product itself is not sufficient anymore. With general wealth increasing in most developed markets, and a higher number of HNWIs, expectations have become higher too. Clients are looking for more than a high-end car, they want something that is also unique and distinguishable. So, virtually limitless selections of colours, materials, interior, and exterior specifications have been added by every automaker.

The other method used by automakers to cater to this demanding audience is the release of limited-edition models. Often derived in most parts from production cars, limited runs usually feature a few unique additions that can, at times, be only cosmetic. These rare models are more desirable as they also suffer much less from depreciation. The peak of this trend is represented by one-offs which have also been constantly increasing over the past 10+ years as shown in One-off Supercars: What’s the next step for luxury automotive?

dbs 770 ultimate volante*Latest example of limited-run by Aston Martin DBS 770 Ultimate Volante

Additionally, each OEM used different methods to realise efficiencies in production and resource management. Bentley’s ‘Dream Factory’ realised with a £2.5 billion investment significantly reduced water consumption, improved waste management, and overall carbon footprint. Others such as Aston Martin optimised product development processes that allowed them to maximise cross-carline component sharing. In turn this reduced processes and engineering complexity.

Unfortunately, for some OEMs, this also corresponded to significant layoffs over the last two years, which surely contributed to the reported results.

Further Brand diversification

Other important factors contributing to the growth of luxury automotive brands apart from the delivery of new cars, and the ones quoted above, are the pre-owned market and events.

As discussed previously (Luxury Automotive Resale Value and Depreciation: How and Why) the pre-owned market is extremely important for luxury automakers, and not only because low depreciation makes cars more attractive for potential buyers, but also because most new clients when approaching their first purchase chose a used vehicle.

What often happens next is that these clients end up owning more than a single car, in fact over 50% of a large sample of owners claim to possess more than one luxury vehicle. This choice is often strictly tied to branding and brand value, so clients effectively become part of a restricted elite where they also get involved in a plethora of activities that offer OEMs more opportunities to create additional revenue streams.

Bentley's latest announcement on this field is particularly interesting. With its latest program called “Extraordinary Journeys”, the brand offers highly curated road trips in selected locations revolving around the best driving experiences possible while moving through high-end hotels, fine dining, and other interesting cultural activities. While this is something that many brands organise for their clients, what is unique in Bentley’s case is that for the first time, they are opening these programs to non-clients, giving them the opportunity to drive a range of different models during the trip. This is not only a great additional revenue source, but also a smart way to attract new potential buyers and create brand advocates thanks to a proper 360° experience that goes beyond just the product.

Coming Years

Over the coming years, the luxury market has new important opportunities coming from the transition to electrification and with new technologies. SaaS (Software as a Service) creates even more options for personalization throughout the entire customer journey. From early stages to after-sales, OEMs can offer additional services and make their ownership experience even more unique.

rr spectre*Rolls-Royce Spectre is the first offering a customisable digital cluster according to clients' preference

The segment has been more resilient despite the difficulties the wider sector went through over the past 3 years, and so far signs seem to indicate the positive momentum might continue.

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