In 2017, luxury cars in the UK saw sales growth weaken in current value terms after seven consecutive years of double-digit growth; this slowdown continued to an even greater extent in 2018, only just remaining in positive territory. This reflected the ongoing uncertainty surrounding Brexit negotiations, which impacted demand for cars across all price points.
However, luxury cars is expected to return to better growth after 2018, in part because of the growing higher-income population, and also due to stricter taxes on older diesel cars, which will boost the uptake of newer models. Also influencing sales are attractive automotive financing options that base interest payments on the depreciated value of the vehicle and reward buyers of vehicles that appreciate in value over the term of the loan.
Whilst newer automotive financing options will indeed make luxury cars more accessible to middle-income consumers, the vast majority of sales will continue to be attributed to high net-worth individuals (HNWIs). Thus, forecast growth in luxury cars in the UK will be fuelled by demand from an expanding pool of HNWIs; buyers who have demonstrated a growing appetite for supercars from brands such as Bugatti and Ferrari.
In 2017, Tesla Motors recorded its best year of sales of luxury cars since it began trading in the UK in 2010. As one of the first manufacturers to launch a fully electric luxury vehicle, Tesla is positioned in a very distinct segment of the market compared with the majority of its luxury peers, garnering a significant amount of attention for its launches.
Despite the recent emissions scandal, German car manufacturers continue to dominate luxury cars in the UK, with Mercedes-Benz, Audi and BMW remaining the top three luxury car brands in value terms in 2017. With the exception of BMW, all other German manufacturers gained value share.
Over the forecast period, German car manufacturers are expected to innovate to tap into the UK’s rapidly expanding luxury electric cars market. In 2018, Volkswagen began US production of its fully electric SUV, the e-tron, with UK sales likely to begin by 2019.
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