From my experience watching luxury markets, I'd expect brands like BMW, Mercedes, and Audi sedans to see discounts as tighter credit and higher interest rates slow demand. During 2020, I saw the oppositelimited inventory pushed prices higherbut as supply chains ease, that artificial premium will fade. If you're patient, waiting until late 2024 could mean better deals, especially on traditional gas models that compete with the growing EV lineup.
One clear lesson in the luxury car market is that values can shift quickly when new models or technology cycles emerge. Luxury cars expected to depreciate the most later in 2020 are the Jaguar F-Pace, Porsche Taycan, Mercedes-Benz S-Class, BMW 5 Series, and Alfa Romeo Stelvio. All of these face hurdles. Jaguar's shift to EVs is dampening sales of its petrol engines, while the Taycan is being rapidly overshadowed by rivals with greater range. The S-Class is coming under pressure ahead of its next redesign, and it will also face increased competition from other flagships. The 5 Series is impacted by excess inventory and high incentives. Meanwhile, the Stelvio still battles a poor resale value and higher running costs. The underlying causes come down to five factors. First, inventory build-up forces dealers to clear older stock. Second, the pace of technological obsolescence particularly in EV batteries and infotainment,products, means that a new car, even a two-year-old one, can seem dated very quickly. Third, there is a change in the demand side as the customer is shifting his preference to lower and more fuel-efficient cars. Fourth, various other economic compulsions are making the ownership of premium cars unattractive, with factors such as higher insurance costs, servicing and financing costs. Finally, regulatory interventions, whether through mandatory EV purchases or purchase incentives, affect the desirability of certain models. In our business, value drops impact more than resale. They factor into insurance and finance claims and are a baseline customer expectation. A car that depreciates too quickly is a risk to both lender and driver. Foresee the market's twists and turns and convey them to customers proactively, and you turn depreciation from an unexpected expense into an anticipated and controlled factor of doing business.
Expect price drops on some luxury cars later this year because of the economy, changing buyer interests, and new tech. Big sedans such as the BMW 7 Series, Mercedes Benz S Class, and Audi A8 usually lose value fast, and that should keep happening as SUVs gain popularity. Older electric and hybrid luxury cars will also drop in price as battery tech improves and makes them seem old. Brands like Maserati, which are costly to own or fix, may see bigger drops too. Interest rates are high, making things less affordable. Plus, there are more off lease cars available, and people want SUVs and newer EVs. Because of this, cars that aren't efficient, tech savvy, or reliable may see the biggest price drops.
Porsche Taycan Resale value has already plummeted. Battery tech is advancing rapidly, newer EVs are coming with more range and other new features, and demand from buyers is on the slide." Dealers are discounting to get aging stock moving. Jaguar F-Pace With Jaguar committing to an all-electric lineup from 2026, SUVs of the ICE variety are losing their luster, and that includes the F-Pace. Dealers have an excessive number of days' worth of inventory of this model on their lots, requiring steeper discounts. Why the drop is happening: Fast EV product innovation (longer range, cheaper batteries) renders new models obsolete quickly. High interest rates are also cooling demand, particularly for luxury premium sedans. Model refreshes — as a new version or facelift is arriving, incoming models get closer to the end of their inventory price ladder.
Porsche Taycan The Taycan's resale value has reportedly already fallen ~26.5% as fast battery tech and newer EVs eclipse its specs. As new models with longer range and faster charge times appear, demand for older Taycans will slacken — prompting dealers to steeply discount them. Mercedes-Benz S-Class & BMW 5 Series This sedan is up against strong competition from tech-forward electric vehicles (EVs) and electrified luxury options. A glut of vehicles, incentives, and increasingly fickle consumer demand for traditional luxury sedans could help boost the discounts further. Reasons for the price drops: EV tech saturation (new models are running past old ones.) Increased inventory of slower-selling models Increasing cost of loans and waning demand for combustion luxury cars
The majority of luxury vehicles that will be at risk of price declines this year are vehicles that ran hot in the pandemic era but now sit upon dealer lots. Large German luxury vehicles like BMW 7 Series, Mercedes S-Class, and Audi A8 already sell slower. SUVs are desired by new customers, so cars build up and discounts are offered by dealerships. High-perf trims (e.g., AMG, M, RS) will also temper. People are braking spending with insurance costs still being too much, and these cars cost too much to insure and keep up. Electric luxury vehicles (Lucid Air, Mercedes EQS, even used Teslas) get squeezed because new EVs keep showing up in showrooms and tax credits don't necessarily carry over to used. The main reasons: Supply is high, and demand is low. There are many returned leased vehicles, especially luxury vehicles. Higher ownership expenses. Maintenance and repairs of luxury cars are sky-high, and this scares away prospective customers. Changing tastes. SUVs and crossovers keep stealing market share from sedans and coupes. Economic pressure. Consumers are keeping cars longer in ownership or going downmarket. So the short answer: if you're eyeing a flagship sedan or a luxury EV, odds are strong that costs drop in the upcoming months.
Audi Q5, Mercedes-Benz GLA, and BMW X1, along with such luxury cars as BMW X7, BMW XM, and Porsche 911 will experience price reduction during the second half of the year. This will be mainly due to the impending GST change, whereby the incremental compensation charge that is now being charged on luxury cars will be eliminated and instead a simplified 40 percent special slab under GST 2.0 will be charged. Such a move will reduce the total tax on such vehicles by approximately 810 percent and car manufacturers will tend to pass on the savings to consumers leading to lower ex-showroom prices by October 31 when the new structure takes effect.
Porsche will be dropping the price in late 2025 and 2026, due to the competition from Chinese manufacturers. Their situation is quite complex right now, and on September 4th they even dropped from Germany's DAX index, as the US tariffs did bite them. The manufacturer will have to do something in order to stop the decreasing sales and loss in share value, and the one approach is to make the cars more affordable for everyday users, while still keeping the quality of a premium brand.
Markets have a way of speaking if you know what to listen for. In housing, I pay close attention to supply and borrowing costs, and those same forces are shaping the luxury car market right now. By the end of the year, brands like Mercedes-Benz, Lexus, and BMW will likely see price adjustments on their sedans and SUVs. Inventories are climbing as manufacturers finally meet demand, and with financing costs higher, dealers are carrying more cars than they are used to holding. That combination sets the stage for softer prices ahead. Moreover,the pattern feels familiar. When higher mortgage rates cooled housing activity, sellers had to meet buyers halfway to keep deals moving. Dealers are in a similar position today. With more cars available and fewer buyers rushing in, they will lean on incentives and pricing adjustments to keep momentum steady. For those who have been waiting patiently, the closing months of the year should offer a more affordable path into the luxury segment.
I believe EVs such as the Jaguar I-Pace and Audi e-tron will become less expensive by the end of 2025. With my keen focus on what's happening in EVs, I see the market being further along than these two models. Tesla pioneered price reductions revealing what has really become stale among EVs, and the newest EV models are beginning to offer useful ranges and trendy designs. The luxury EV market is now beginning to appear old and tired. Knowing that dealers don't want the models sitting idle, there are going to be discounts. If you are waiting for a luxury EV, I would wait until late 2026, when quality EVs will be available with bases at a much lower entry-level price point.
One of the luxury cars which will undoubtedly be headed the other way on price later this year: The Jaguar F-Pace. Part of the reason for this price reduction is changes in the luxury SUV market, where rivals have gone and broken (or fallen) cover already, matching Evans's spec sheet for less cash. The answer has been incentivizing better deals on their luxury SUVs like the Jaguar F-Pace, so that automakers can influence buying decisions with incentives. Hence this model is going to get a big chunk in the price of consumers in the 2nd half year.
I monitor the secondary market and imagine that in the upcoming fall of this year, used Porsche Taycan values will drop significantly—not due to being a bad car, it is a very good one—but because Porsche has a new long-range update coming out. Once collectors see it as "early tech," they will avoid it and the depreciation will be overwhelming. This is the same reality we are seeing with first-generation Audi e-tron SUVs.
From a financing perspective we will see the prices of luxury plug-in hybrids like the BMW 745e and Volvo XC90 Recharge drop significantly. Why? Because they are stuck in a tough middle ground, they are hybrids but not fully electric and not efficient hybrids compared to the incrementally more advanced technology being released. Residuals continue to slide downward toward value of 0 because more consumers are adopting Fully Electric Vehicles or Efficient Ice SUVs instead. I have already seen some lease buyouts not as high as I originally articulated. For buyers, late 2025 will be the sweet spot for one of the models mentioned above, assuming you are okay with a "bridge technology" vehicle.
I've noticed, lease cycles affect pricing with impact. This fall, we will see the BMW 5-Series and Mercedes E-Class dip in cost because a few thousand three-year leases have returned those EVs to the market. When too many of the same identical models return to the dealer, it creates too much supply compared to demand, myself included would reduce the price instead of it sitting on the lot.
The Porsche Taycan, Jaguar F-Pace, and Mercedes-Benz S-Class are all likely to get huge resale hits in the second half of the year. Taycan is losing about a quarter of its annual revenue since better EV is long-range and faster-charging, which is entering the business. The Jaguar F-Pace has nearly 291-day stock on dealer lots that point to low demand and force heavy discounting. Even though the legendary Mercedes-Benz S-Class is losing out because the purchasers are moving to the new hybrid and electric luxury sedans. It is not a combination of forces that cause these drops but the intersecting forces. Demand is lower than supply of luxury EV and thus incentives are vigorous. Models where the hybrid and EV technology is outdated are being sold at a discount so as to compete. Hiking the interests raises the cost of financing by thousands that also continues to eliminate people who would have spent hundreds of thousands of money to buy the cars. The combination of all these pressures will lead to a soft luxury car resale period end of 2025.
Expect price cuts on luxury SUVs such as the Volvo XC90, Audi Q7, Mercedes-Benz GLE, BMW X5 and Jaguar F-Pace later this year. This is mainly because dealers want to sell older models fast as new and improved versions arrive. So they offer deals. Plus, many of these luxury cars are coming off lease at the same time. This increases the number of used cars available and lowers prices. With higher interest rates, fewer people are buying, so dealerships are more willing to lower prices. If you're looking for a deal on a luxury car, autumn and the end of the year might be the best time to buy.
Tesla model 3 refers to one of the most anticipated luxury cars in the market today. Nevertheless, analysts foresee that it will suffer a sharp decrease in its price later in this year. This is attributable to two major factors which are competition and the increase in production. With the increasing number of electric cars sold in the market, there will be increased competition to Tesla Model 3. This may cause a slump in the demand of the car and this will result in a fall in the price. Tesla can also reduce the price as it increases the production quantity and transports a large number of vehicles to deal with high demand to retain a competitive advantage.