Merc1
Premium
Sales of luxury cars in North America are likely to fall under 1 million units for the first time in more than a decade
European luxury-car companies are introducing their usual lineup of new and pricey models at this week's North American International Auto Show in Detroit. But analysts and some industry executives are unsure about how many buyers there are likely to be this year or even in the foreseeable future.
Sales for all luxury auto brands were down across the board for 2008. In 2009 the luxury segment of the auto industry is expected to fall below 1 million units sold for the first time since 1996, according to a forecast by Global Insight. Sales tracking firm Autodata said sales last year were 1.19 million units, down 21% from 2007 when sales were 1.41 million. Luxury sales have been as high as over 1.5 million in recent years.
Ford Motor (F), which has recently sold most of its luxury car business, doesn't think it made the wrong decision, especially given, as Ford sales analyst George Pipas calls it, "the financial restructuring" that a lot of baby boomers are going through as a result of the collapse in housing values, Wall Street investments, and consumer savings. "Consumers in the age range of 50-65 are a huge part of luxury sales, and this group is in a retrenchment that could take at least a few years to complete," says Pipas.
AutoNation (AN), the world's largest retailer of automobiles, has seen its luxury vehicle business slide since last September. CEO Mike Jackson says he believes a lot of traditional luxury buyers are going to weigh a lot more options when their leases come due. "The consumer's psyche is scarred," says Jackson, who was Mercedes' top U.S. executive in the 1990s. "People have lost money in ways they never thought possible, and many will look beyond luxury."
BusinessWeek - Complete Article and Video Interviews with James O'Donnell, president of BMW North America and Ernst Lieb President and CEO of Mercedes-Benz USA
M
