Race for Luxury Car Sales Crown Could Prove Brutal
As if last year's race for luxury car sales leadership wasn't intense enough, this year's race could result in a year-end slugfest.
The scuttlebutt at the recent Paris auto show was that European auto executives, especially those running luxury brands, were alerting their U.S. dealers to expect an influx of inventory to sell by the end of the year because of softer sales in Europe and China while the U.S. market increases.
Volkswagen of America CEO Jonathan Browning hinted to Edmunds.com in the automaker's September sales call that, in fact, additional production capacity exists and needs a market. "Some markets in Central and Eastern Europe, including Russia, are showing good growth," he said. "If you compare now to a year ago, the pressure on assembly capacity and components has eased, and there's more availability. That gives us the opportunity to make the most of the market recovery in the U.S."
But don't expect competitors to sit idly by, allowing the Germans to grab sales and share, noted other executives. "Companies will look for where they can sell more, but we're going to be in the fight," Ben Poore, head of Nissan's Infiniti division, told Edmunds.com. Like Toyota's Lexus, Infiniti has been regaining traction after the 2011 earthquake and tsunami in Japan that disrupted production and stymied sales.
The ensuing battle could result in aggressive year-end promotions, which could include discounting. December, always a significant marketing month for luxury vehicles, could prove even more intriguing this year.
What seems clear at the moment is that long-time luxury leader Lexus is out of contention again this year. Tim Morrison, vice president of Lexus sales and dealer development, told reporters in Detroit recently that the recently introduced new Lexus models are helping close the gap with German automakers but came out too late in the year to leapfrog them. Lexus is introducing a host of new models this year, including redesigns of its high-volume RX SUV and ES sedan along with freshening of more niche models like the flagship LS sedan and sports performance GS sedans. "I don't we have a chance [for luxury car leadership] this year, but we don't care either," said Morrison, according to the Wall Street Journal. "If I had all these [new vehicles] on Jan. 1, it might have been a different story."
The Japan earthquake and tsunami knocked Lexus, which had held the luxury car sales crown for a decade, out of first place last year. That opened the door for Mercedes-Benz and BMW to duke it out. And duke it out they did. On the January day that 2011 sales were being reported by automakers, both Mercedes and BMW stalled at publicly releasing their sales numbers; neither wanted to blink first for fear of surprise one-upmanship.
In September, the race tightened significantly. Only 2,770 vehicle sales separated first-place Mercedes from third-place Lexus, with BMW (minus Mini) in between. Mercedes (minus Smart and Sprinter) racked up record September sales, which were ahead of September 2011 by 7 percent. Mercedes-Benz volume leading C-Class, which goes up against BMW's revamped 3-Series, led the charge with sales up 15 percent from a year earlier. BMW's September sales weren't record-setting and, in fact, were flat with a year ago. Lexus sales soared 36 percent from September 2011, when earthquake-related production disruptions depleted inventories. Plentiful inventory combined with freshened new products fueled the hike: ES 350 skyrocketed 81 percent; RX sales rose 41 percent; and, albeit low volume, GS sales soared 508 percent.
Still, it appears Mercedes likely will wind up with back-to-back luxury car sales crown. "We're on our way to a record year with extraordinary momentum and demand outpacing supply," said Steve Cannon, president and CEO, in the company's September sales report. Indeed, for the year to date through end of September, the spread among sales of the top three is fairly wide: nearly 21,000 vehicle sales between first-place Mercedes and third-place Lexus. Mercedes leads BMW by 5,221 units, which is ahead of Lexus by 15,407 vehicles. Meantime, Audi continues to rack up record sales in the U.S., Acura is regaining some traction, Infiniti is in full recovery from last year's earthquake and domestic automakers Cadillac and Lincoln are trying to get back in the game.