Luxury cars take a backseat in India as Gulf uncertainty grips buyers, says BMW

BMW AG’s India arm is witnessing a cautious turn among affluent buyers, as geopolitical tensions in the Persian Gulf begin to weigh on consumer sentiment and dent demand for high-end vehicles, Bloomberg reported.

According to Hardeep Singh Brar, president and chief executive officer of BMW Group India, uncertainty linked to the ongoing US-Iran conflict has led many customers to hold back on big-ticket purchases. While some are delaying decisions until there is more clarity on global economic conditions, others are increasingly considering electric vehicles amid expectations of rising fuel costs.

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“When cash flows are suddenly impacted, luxury is always discretionary,” Brar said in an interview with Bloomberg.

The current trend echoes patterns seen during the COVID-19 pandemic, when demand for premium goods slowed before recovering alongside broader economic stabilisation.

Despite the recent caution, BMW had begun the year on a strong note in India. The company sold 4,567 cars in the January–March quarter, marking its best-ever first-quarter performance and a 17% increase from a year ago.

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India’s luxury car segment, though still small at about 1% of total passenger vehicle sales, remains a key growth area for global premium automakers, driven by a steadily expanding base of wealthy consumers.

Industry-wide quarterly data, expected in the coming days, is likely to provide a clearer picture of whether weakening sentiment is spreading across the segment.

BMW’s growth in India has also been supported by rising interest in electric vehicles, with the company aligning prices of battery-powered models closely with its internal combustion offerings to attract cost-conscious buyers.

“If there is an opportunity to save a meaningful amount over time, they will look at it seriously,” Brar added.

Electric vehicles have played a key role in BMW’s relative outperformance in the market. In March, the company sold 437 EVs, compared with 97 units by Mercedes-Benz and 49 Model Y SUVs by Tesla, according to data from the Federation of Automobile Dealers Associations.

Overall, BMW delivered 1,185 electric vehicles during the quarter, an 83% jump from a year earlier. Fully electric models now account for around 26% of its total sales in India, underscoring the growing shift in buyer preference even as broader demand shows signs of moderation.