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Tire Trailblazer
BMW extends lead over perennial rival Mercedes-Benz in Q3
Mercedes cited a model changeover and parts shortage for its Q3 sales drop. But one retailer said EVs with high sticker prices are a drag on market share growth.
This year's luxury sales race resembles a Formula 1 Grand Prix on any given Sunday.
Like F1 world champ Max Verstappen, Tesla has disappeared over the horizon, leaving the luxury segment's former favorites, BMW and Mercedes, to dogfight for No. 2.
Tesla delivered 498,000 vehicles in the first nine months, or nearly twice the volume of No. 2 BMW, according to estimates from Automotive News Research & Data Center.
Meanwhile, BMW now has a 44,447-vehicle lead over its German rival for the period.
BMW consolidated its No. 2 position in the third quarter, propelled by robust EV sales. Deliveries rose 7.6 percent in the quarter to 83,949.
But Lexus lapped Mercedes for the No. 3 spot in the quarter as the three-pointed star struggled with parts shortages for its No. 2-seller, the GLC crossover.
Lexus reported an 11 percent hike in sales to 74,896 for the quarter, powered by demand for its electrified crossovers.
Mercedes sales, excluding commercial trucks and vans, dipped 1.8 percent to 71,098 vehicles in the July-to-September period.
As of Oct. 2, according to a Cox Automotive analysis, Mercedes' dealers had a 28 days' supply of the GLC compared with a 60 days' supply across the Mercedes model lineup.
Overall, premium-brand sales tallied 647,215 cars and light trucks in the third quarter, up 18 percent from a year ago, while the broader industry's deliveries rose 17 percent.
‘Elephant in the room'
Like the rest of the auto industry, the luxury segment is bringing a wave of battery models to the market.
BMW delivered 13,079 battery-powered vehicles in the third quarter, setting what it said is a "new quarterly benchmark for BEV sales."
But BMW has its work cut out in the final quarter if the automaker hopes to reach its target of 50,000 electric vehicle sales in the U.S. this year. So far this year, BMW said it has delivered 31,043 electric vehicles.
Mercedes blamed the GLC's 41 percent sales dive in the quarter on a "supplier bottleneck."
But EV pricing, not a parts shortage, is the "elephant in the room" that's holding back Mercedes' sales momentum, according to a retailer who asked not to be identified.
"We know that the No. 1 problem with electric vehicles is affordability," the source said, noting that the days' supply of Mercedes EQ electric models is triple that of its combustion engine variants.
"We've reached an inflection point where there's way too much inventory than demand," the retailer said, noting rising interest rates mean higher floorplan expense.
Mercedes is quickly expanding its battery-powered lineup, adding the EQE sedan and crossover models this year. EQ sales comprised 14 percent of the brand's total volume in the January-to-September period, or 29,691 vehicles.
The high sticker price issue is compounded by Mercedes' luxury customers not qualifying for federal EV tax credits of up to $7,500.
"We need [incentive] programs and subvention," the retailer said. "We can't correct [Mercedes'] pricing mistake by giving away all our gross profit and then some."
EV price competitiveness is also a reason the luxury competition is finding it hard to gain on Tesla, which has sharply reduced the price of its flagship models.
As of early September, the Model X crossover starts at $81,630, including shipping. Last year, the Model X started at $122,440 with shipping. And the Model S sedan begins at $76,630 with shipping, compared with $106,440 last year.
Tesla is trading margin for market share.
In the first nine months, the Austin, Texas, EV maker has cornered a 26 percent share of the luxury segment and outsold last year's record 491,000-vehicle volume, according to Automotive News estimates. Tesla does not break out sales by market,
In Q3, the automaker delivered 155,000 vehicles, up 27 percent from the previous year.
Best of the rest
Audi reported deliveries of 59,535 in the quarter, up 21 percent from a year earlier.
Cadillac rounded out the Top 5 list of legacy auto volume leaders with Q3 sales of 35,638 vehicles, up 5.8 percent.
Volvo's third-quarter sales rose 50 percent to 32,375 among other luxury brands.
Genesis deliveries surged 28 percent to 19,427. Hyundai Group's luxury brand has posted year-over-year sales growth in 11 consecutive months, with year-to-date deliveries up 24 percent.
