Luxury cars aren't selling anymore in America. The Detroit News reports, "In the United States, traditionally the most lucrative auto market, Mercedes sales plunged 42.9 percent and Cadillac sales slumped 42.5 percent in January, compared with the overall market's 37.1 percent drop. Bentley sales were off 74.7 percent, while Porsche's fell 36.1 percent." The sales drops for luxury automakers, in most cases, are worse than the declines suffered by brands that sell more affordable cars.
This trend is relatively new, even during an economic downturn, Autoblog reports. "In past recessions, the wealthy have been insulated by their money, but not this time. Real estate and banking are responsible for a large amount of the financial pickle we're in, and as those sectors get walloped by reality, the luxury cars typically purchased by agents, brokers, and bankers are languishing."
"Once envied for generating the industry's highest profit margins per car," according to Fox News, luxury marques like BMW, Mercedes-Benz and Audi "are facing a sea change triggered by imploding demand amid a broader trend toward smaller, less-profitable vehicles."
The quality, and relative luxury, of those vehicles is also a factor in the change. Traditionally, the Detroit News notes, "new technology was available first on luxury vehicles and then, years later, in more affordable models. But that time gap is shrinking." Now that leather seating, satellite-linked navigation systems and premium stereos can be ordered on many less-expensive cars, the incentive to buy a more costly nameplate is fading.
Environmental concerns also factor into the trend. The News notes that buyers of Toyota's Prius "earn more than $100,000, on average," meaning that the most recognizable hybrid is, in fact, competing with BMW and Mercedes products for customers.
"Things might turn around a bit as environmentally conscious premium cars become available," Autoblog comments. "There are the new diesels, and Lexus will have its own dedicated hybrid when the HS250h goes on sale this fall."
However, to make room for those models, dealerships will need to sell the luxury cars currently filling their lots and their balance sheets - so prices of even the most luxurious cars are likely to decline. Research the best car deals with U.S. News' car rankings and reviews.
