Edmunds Auto Observer: Luxury Brands Gut Out Downturn, Along With Their Customers

[Merc1]

Sales of automotive luxury brands are struggling just like the overall U.S. market is.

Collectively, so far this year, upscale marques have only managed to hold on to their 11 percent share of the market from 2007. And some of the loftiest brands in the American auto business have been demonstrating some of the least resiliency.

Lexus, for example, is off 15 percent in 2008 sales through the end of August, and BMW brand has suffered a decline of 7 percent. Among domestic luxury makes, Cadillac has plunged 13 percent for the year, while Lincoln has eased by 19 percent.

Even luxury brands with strong new-product stories are struggling this year, such as Audi, which has managed only a 4-percent sales decline so far in 2008. "There's sort of a re-set button being hit by a fair number of [luxury] consumers," said Scott Keogh, chief marketing officer of Audi of America.

2008 Porsche Boxster - facing right - 225.JPGAnd a brand that is arguably the luxury-segment flagship, Porsche, has suffered its own 17-percent decline year-to-date, with a 45-percent decline in August concentrated in the brand's important sports-car segment. The company called it "partly the result of the somber consumer sentiment about the economy that continues to affect sales of luxury goods such as sports cars."

Added Mark Schirmer, a spokesman for Ford's Lincoln brand: "The luxury market is down overall like the rest of the market, and we don't expect the luxury segment to buck the trend anytime soon. It will continue to struggle a bit in line with the overall market."

Even worse, some auto executives worry that the luxury segment actually could begin slipping below the industry's overall sales trend as America's general economic malaise - and, specifically, the credit crunch - transmit the pain even among well-to-do consumers.

"I personally think we're going to see an even greater return to minimalism in the U.S. market," said one Big Three sales executive. "With all the [economic] pressures on households, we may see luxury sales giving ground to the rest of the industry."

On the other hand, online consideration of luxury vehicles has snapped back at least somewhat since June's huge sales slide rocked the industry.

Consumer visits to new-vehicle detail pages for entry-level luxury vehicles (still under $40,000 apiece) on Edmunds.com increased by 4 percent for the week ended August 17, according to Edmunds.com research, compared with June, and by 1 percent compared with December 2007.

Meanwhile, consideration of mid-luxury vehicles increased by 13 percent for that mid-August week compared with June but was still 14 percent below the level of last December. And for premium-luxury vehicles, priced at more than $60,000, Edmunds.com research showed a consideration boost for that week of more than 23 percent over June - though it was still 22 percent below December 2007 consideration levels.


Full Article:


Luxury Brands Gut Out Downturn, Along With Their Customers - Auto Observer


M