Luxury Car Demand Beyond Metros: Which Tier-II Cities in India Buy the Most?

Surat, Jaipur, Indore and Ludhiana have the strongest public evidence as India’s leading Tier-II luxury car markets, with Lucknow, Kanpur and Chandigarh close behind. That comes with one big caveat: no carmaker publishes city-wise sales, so nobody outside the industry can produce an exact ranking. What the evidence does show is that demand is spreading, slowly and unevenly. BMW says its top 10 cities now account for about 65-70% of sales, down from about 80% five years ago. Metros still dominate, but the next ring of cities is where much of the growth now sits.

How much of India’s luxury car market is outside the metros?

The answer depends on who’s counting, and that’s the first thing to understand. Here’s what the brands themselves have said.

Sources: Autocar Professional, Indian Retailer, Outlook Business, Team-BHP’s report of Mercedes-Benz India’s 2026 press conference, Business Today, PTI via Outlook Business.

These numbers don’t line up, and they can’t all be measuring the same thing. BMW’s top five can’t logically take a larger share than its top 10, for example. Our reading is that each statement uses a different definition of “metro” and “emerging market”. Pune, Ahmedabad and Chandigarh could sit on either side, depending on the speaker.

So treat “30% to 50%” as the honest range. On Audi’s forecast of 58,000 luxury cars for 2026, that would be roughly 17,000 to 29,000 cars a year sold outside the core metros. That’s our arithmetic, using one brand’s mix as a rough guide for a whole market, so it’s an illustration and not an official figure.

Which Tier-II cities buy the most luxury cars?

Since sales data isn’t public, we’ve looked at which cities keep coming up across independent sources: brand heads, dealer openings and the exotic brands. This table is an evidence check, not a sales ranking.

The pattern is telling. Surat has diamonds and textiles, Ludhiana has manufacturing, and Jaipur and Indore are trading and business centres. Outlook Business describes a luxury buyer who is increasingly self-made, and our view is that these family-run business towns are exactly where that buyer lives.

Super-luxury demand isn’t limited to the big cities either. Lamborghini named Ludhiana, Kanpur, Bhubaneswar, Surat and Hubli as strong sources of demand back in 2019, and Maserati pointed to Lucknow, Kanpur, Indore, Bhopal, Mangalore and Goa in 2021. A Lamborghini buyer in Hubli simply travels to a dealer in a bigger city, which is why city demand and dealer location often differ.

Is the gap with the metros really closing?

Yes, but less dramatically than the marketing suggests.

In 2018, Mint reported that Mumbai and Delhi’s share of luxury sales had fallen to about 45%, from close to 70% in 2009-10. By 2025, Santosh Iyer of Mercedes-Benz India put Delhi and Mumbai at about 35-40%. That’s a real shift over 15 years, but these two cities remain huge. Outlook Business reported that roughly a third of Mercedes’ monthly sales came from just three Delhi-NCR dealerships.

The clearest sign of room to grow is penetration, meaning the luxury share of all cars sold. Iyer gave these figures in October 2025:

So a luxury buyer is roughly four times more common among car buyers in Delhi or Mumbai than in Indore. That gap is why every brand is heading the same way. Iyer also said percentage growth is coming sharply from some Tier-II markets, while metros still lead in absolute numbers, and he noted that AMG models do well with enthusiasts there.

Why Tier-II luxury demand is growing

• Wealth is spreading. Audi India’s Balbir Singh Dhillon said in October 2026 that wealth creation is increasingly moving beyond the big cities. Outlook Business reported that the number of people declaring incomes above Rs 50 lakh rose from 1.85 lakh in 2013-14 to 9.39 lakh in 2023-24.
• First-time buyers. Iyer said almost half of Mercedes’ customers are buying a luxury car for the first time, and many of them research heavily and care about resale.
• More ways in. In our view, entry SUVs and locally assembled models have widened the market, and our first luxury car guide covers those choices.
• Showrooms are getting closer. See the next section, because this is the factor that’s easiest to measure.

The network race: where carmakers are opening next

Dealer plans are the best public clue to where brands expect demand.

Sources: Team-BHP, Rushlane, Business Standard, Outlook Business, Autocar Professional, Storyboard18.

Mercedes’ goal explains the logic. Iyer said in 2024 that customers shouldn’t have to drive more than two hours for service. That’s the real barrier in a smaller city: buying a luxury car is easy, but living with one 200km from a workshop isn’t.

What this means if you’re buying outside a metro

This is where we’d focus, and it’s our advice rather than industry data.

1. Start with the workshop, not the showroom. Find your nearest authorised service centre before you choose a brand. A brand with a workshop in your city beats a slightly better car that’s four hours away.
2. Buy the mainstream model. Rare variants mean parts delays and fewer specialists. Our most reliable luxury brands guide is a useful filter.
3. Compare on-road prices across cities carefully. Road tax varies by state, and registering a car in another state to save money can cause paperwork problems. Get written quotes, and check the rules with your RTO.
4. Think twice about air suspension and big wheels. Both are less forgiving when a specialist is far away.
5. Check charging before buying an EV. You’ll rely on home charging far more than a metro owner would. Luxury EV interest is growing in states like Gujarat and Kerala, according to a 2025 report on VAHAN data, but check your own routes.
6. Widen your used-car search. Lexus said in 2023 that about 40% of its pre-owned luxury sales came from Tier II and III cities, so you won’t be alone. Many listings sit in bigger cities, and it’s often worth travelling for the right car. Get it inspected by a brand workshop or independent expert first; our inspection checklist tells you what to look for.

You can browse pre-owned luxury cars listed across cities on Motozite, including Jaipur.

Our take

India’s luxury market is no longer just a Delhi and Mumbai story, but “Tier-II” is too blunt a label. Surat and Indore aren’t the same market as a town that has just got its first showroom. The cities to watch are business towns with strong family wealth and, increasingly, a workshop nearby. Metros will stay on top for years, but we’d expect the next big jump in luxury sales to come from cities that most car buyers don’t associate with a Mercedes showroom. When brands start publishing city-level numbers, this picture will get much sharper. Until then, treat any confident ranking with suspicion, including ours.

FAQ: luxury car demand in Tier-II cities

Which Tier-II city buys the most luxury cars in India?

No carmaker publishes city-wise sales, so there’s no verified ranking. Surat, Jaipur, Indore and Ludhiana have the strongest public evidence. Surat and Ludhiana were reported among India’s top 10 luxury markets in 2018, and Mercedes-Benz India’s CEO cited Jaipur and Indore for top-end demand in 2025.

What share of luxury cars are sold outside metros in India?

Brand statements suggest about 30% to 50%, depending on how “metro” is defined. BMW said in 2026 that non-metro and smaller markets contribute nearly 30%, while Mercedes-Benz reported 50% of buyers outside Tier 1 cities. These figures use different definitions, so they can’t be compared directly.

Why are luxury car sales growing in smaller Indian cities?

Wealth is spreading beyond the big metros, more first-time buyers are entering the market, and brands are opening showrooms and workshops closer to customers. Luxury penetration is also much lower there. Mercedes-Benz India’s CEO put it at about 0.6-0.7% in markets like Indore, against about 2.8-2.9% in Delhi and Mumbai.

Which city has the most luxury cars in India?

Delhi and Mumbai are the largest markets. Mercedes-Benz India’s CEO said in 2025 that the two cities together make up about 35-40% of the market. Outlook Business also reported that about a third of Mercedes’ monthly sales come from three Delhi-NCR dealerships.

Are Mercedes and BMW expanding to Tier-II cities?

Yes. Mercedes-Benz India had 60+ cities and 145+ touchpoints in early 2026, with Varanasi planned as a new city. BMW planned dealerships in nine new cities in 2025, including Kozhikode, Ranchi, Lucknow and Guwahati. Audi plans to grow from 28 showrooms to more than 50 by 2030.

Is it practical to own a luxury car in a small Indian city?

Yes, if you choose around service access. Check the distance to your nearest authorised workshop first, and favour mainstream models with easy parts availability. Mercedes-Benz India has said customers shouldn’t have to drive more than two hours for service, but coverage still varies by brand and city.