For the Internal Revenue Service, a luxury car is not a business necessity. To this end, the agency limits the amount of the cost of a luxury car that your company can deduct from its taxes. Congress decided years ago that taxpayers should not subsidize extravagant vehicles used by companies. To avoid that, the law squeezes out the depreciation deductions allowed for “luxury cars”.
But don't think about Rolls Royce or Ferrari. Congress has a much less extravagant vision of luxury. The purpose of luxury car limitations is to control the type and amount of money companies spend on luxury cars for tax purposes.