Analysis conducted by McKinsey & Co in July 2022 found that the global mainstream vehicle market has largely stagnated, with little growth expected up to 2031. Conversely, the luxury sector is expected to grow between 8% and 14% per year. Consumer spending for low-to-medium-income earners has been and will continue to be restricted by geopolitical events, such as the pandemic and the cost-of-living crisis. However, higher earners are not experiencing similar constraints. McKinsey separates ‘luxury’ into four tiers based on price: US$80,000-US$149,000, US$150,000-US$299,000, US$300,000-US$500,000, and US$500,000+.
Despite the luxury segment’s healthy economics, some new entrants to the market are choosing to avoid the luxury label. Italian start-up Aehra, for example, prefers “high premium” as this indicates high quality materials, finishings and performance but without extravagance or superfluity. According to Chief Executive Hazim Nada, the price range for this segment is US$160,000 to US$180,000.
