Tier-2 and Tier-3 Cities accelerating Luxury Automobile sales in India
Shivam Chawla, Founder of The Car Mall
Mumbai, Mar 16: India’s luxury automotive market is undergoing a visible geographic shift, with Tier-II and emerging cities increasingly driving incremental growth, marking a new phase in the country’s premium mobility story. What was once a metro-centric segment is now expanding into cities such as Agra, Lucknow, Jaipur, Indore and Chandigarh, backed by rising disposable incomes, stronger local entrepreneurship and growing aspiration for premium lifestyles.
Industry estimates suggest that Tier-II and Tier-III cities now account for nearly 20–25% of India’s luxury car demand, up from low double digits a decade ago. Luxury SUVs in particular have emerged as the fastest-growing category outside major urban centres.
According to a report by Spinny, Tier-II cities are experiencing rapid growth, with sales increasing by over 30% in cities like Jaipur, Coimbatore, and Kochi. Driven by young entrepreneurs and increased wealth, this segment is outpacing metro growth, with states like Bihar and Odisha seeing 102.5% and 84.58% growth respectively.
The Indian luxury car market size is expected to grow from USD 1.44 billion in 2025 to USD 1.52 billion in 2026 and is forecast to reach USD 1.96 billion by 2031, growing at a 5.16% CAGR over the forecast period (2026-2031), according to study by Mordor Intelligence. In the year 2025, Sport Utility Vehicles (SUVs) led the Indian luxury car market with a 47.43% share while sedans are expected to resurge with a forecast 10.12% CAGR through 2031. INR 50 to 80 lakh bracket accounted for 40.87% of the Indian luxury car market size in 2025. West India retained a 32.94% of the Indian luxury car market share in 2025. Dealerships still accounted for 67.82% of India's luxury car market share in 2025, yet OEM-operated web portals are projected to scale at a 14.62% CAGR through 2031.
SUVs remain indispensable in tier-2 markets with poor road surfaces; the ultra-luxury SUV niche, priced above INR 2 crore, is advancing on the back of models like the Rolls-Royce Cullinan.
Uttar Pradesh, India’s most populous state, is increasingly reflecting this trend. Cities like Agra—traditionally known for tourism and trade—are witnessing a rise in first-time luxury buyers, professionals and business families opting for premium German, British and emerging electric luxury brands. Dealers report higher enquiries not only for entry-level luxury models, but also for vehicles priced well above the ₹60–80 lakh range, indicating growing confidence and purchasing power.
“The Tier-II luxury customer today is extremely well-informed and decisive. They are not compromising on brand, specification or service—they simply want convenience, trust and transparency locally”, says Shivam Chawla, Founder of The Car Mall, a multibrand luxury automotive enterprise that has been operating since 2003 in Agra. Also, as a national automotive influencer known as TheAutoXpert, with over 40,000 followers, he is part of a growing ecosystem of domain experts shaping consumer decisions in smaller cities.
“In Tier-II cities, purchasing behaviour remains largely driven by physical interactions, as customers place high importance on touch-and-feel experiences and driving trials” adds Shivam. Realising this, we initiated an experiential platform in 2025, called Luxe Motor Show, one of North India’s first large-format luxury automotive showcase in a Tier-II city. “While the First edition saw participation by 9 major global luxury brands, the 2026 edition scaled up significantly with 12 brands reinforcing Agra’s position on India’s luxury automotive map and demonstrating the commercial viability of premium auto exhibitions beyond metros”, he adds.
Analysts believe that entrepreneurs and brands rooted in Tier-II markets will play an anchoring role in the next phase of India’s automotive growth. By combining local market knowledge with organised retail practices, integrated servicing infrastructure and consumer education, players like The Car Mall are helping bridge the gap between aspiration and access.
As luxury automotive brands look to sustain growth in a competitive environment, Tier-II cities are no longer peripheral markets—they are fast becoming strategic growth centres, reshaping how and where India’s luxury car story is written. According to Mordor intelligence report, emerging markets are scaling 4-8x faster than established luxury hubs, signaling a fundamental redistribution of high-income consumer wealth across India.
