The premium automotive sector has faced significant pressures in recent years, marked by a notable buying-down trend driven by high inflation, rising interest rates, and exchange rate weakness. These factors have intensified both affordability pressures on the consumer side, and pricing pressures on the manufacturer side. This has prompted buyers to explore alternative options from new brand entrants primarily targeting the price-sensitive volume segment with well-equipped vehicles, despite these brands often having a limited track record potentially affecting residual values and consumer experience.
As a result of the aforementioned factors, the premium vehicle sector has contracted to nearly a third of its size compared with a decade ago, with 2024 marking the lowest level yet.