As India’s luxury car market continues to expand, industry experts say corporate leasing is likely to play an increasingly vital role in shaping demand.India’s growing luxury car market is undergoing a quiet but marked shift, with corporate leasing emerging as a key driver of demand. This reflects rising corporate pay checks and growing aspirations of top-level employees. As companies increasingly lean towards vehicle benefits rather than outright purchases while structuring incentives, leasing is lowering the entry barrier to luxury brands and reshaping how senior executives access high-end mobility. About 15 years ago, most CXOs in India typically drove vehicles such as a Toyota Corolla, Honda Civic, or Toyota Innova. Today, economic expansion and comparatively higher executive compensation is sparking a clear upgrade in preferences to brands such as Mercedes-Benz, BMW, and Audi.
Senior executives are increasingly looking for vehicles comparable to those used by their global counterparts, including premium sedans and luxury SUVs. Leasing companies say luxury cars are among the fastest-growing categories within corporate fleets.
“Since the leasing company takes over the headache of maintenance and resale of the vehicle after the lease period, the client experience on luxury car usage becomes very seamless and easy,” said a senior executive at a leading car leasing company.
Young pros behind the wheel
For many, a company-leased vehicle offers a practical and financially efficient way to do so. The shift is also being driven by changing consumer attitudes among younger professionals. “With the younger generation getting more purchasing power and wanting to spend on experiences rather than ownership, luxury cars on lease work well for them,” the executive said.
Tax efficiency is another factor fuelling the leasing option. For employees, leasing often reduces taxable income compared with outright ownership, while companies can integrate vehicle benefits more efficiently into compensation structures.
“Better awareness of leasing, especially after the regulation of GST, has simplified and made leasing more uniform across the country, with its acceptance improving significantly,” said a senior official at a Mumbai-based company.
Several companies have begun extending luxury car-leasing options to senior management as part of executive benefits.
According to Suvajit Karmakar, country managing director, India, and sub-regional director, Asia at car leasing company Ayvens, demand for premium vehicles within corporate fleets has accelerated in recent years.
“With the growing aspiration to drive a premium car, corporate car leasing is becoming increasingly popular,” he said. “Improving residual values of luxury vehicles have also strengthened the economics of leasing and we have seen our premium car portfolio growing by over 55% over the last three years.”
The shift is also visible in the value of vehicles being leased.
According to an executive at a Delhi-based leasing firm, the average ticket size of leased vehicles has nearly doubled in recent years.
“Earlier, the average ticket size was around Rs 8–10 lakh,” the executive said. “Now it is closer to Rs 17–18 lakh, indicating that more expensive vehicles are being leased.”
NBFCs tap market
Non-banking finance companies are also expanding their leasing platforms to tap the opportunity. “Vehicle leasing has always been attractive for NBFCs as corporates increasingly move to this model of vehicle ownership,” said Raul Rebello, managing director and chief executive officer at Mahindra Finance.
“For employees, leasing is a great option as their taxable incidence comes down,” said Rebello. “Fleet operators also prefer leasing instead of taking outright loans, as it helps them optimise capital deployment,” he said, projecting the leasing business to grow strongly over the next few years.
While luxury cars still make up a small share of India’s overall passenger vehicle market, it has been growing faster than the industry average.
Domestic luxury car sales crossed 50,000 units for the first time in 2024 led by strong demand for premium SUVs and high-end models from global brands.
Operating leases are also gaining traction over traditional bank loans as they allow employees to access more premium vehicles with minimal risk.
Leasing packages typically include services such as maintenance, insurance management, and roadside assistance, while also eliminating resale risk. Additional services such as replacement vehicles and service pick-up and drop facilities further enhance convenience.
Corporate car leasing has also gained momentum after the pandemic as companies reassessed employee benefits and cost structures. “We have seen higher acceptance and better success of company car leases with employees, especially post-Covid,” said Karmakar.
For companies, leasing also offers balance-sheet advantages by preserving cash flows and reducing administrative burdens. At the same time, offering premium leased vehicles can strengthen executive compensation packages while boosting employee motivation and pride.
As India’s luxury car market continues to expand, industry experts say corporate leasing is likely to play an increasingly vital role in shaping demand.
