May 6th, 2012
The Luxury of a New Car or Truck
Has the automobile become a luxury item again, as it was more than a century ago? It’s a question I’ve been asking myself as luxury brands jumpstarted the 2008-09 financial nadir and as the premium German brands post higher sales and profits. General Motors’ Cadillac vice president, Kurt McNeil, says that luxury car sales are about 1 percent behind the rest of the revitalized industry. Cadillac is off 23.9 percent this year through April, and off 13.7 percent retail, while Buick is off 16.4 percent total, 4.9 percent retail.
Lexus sales were flat last month, compared with the post-tsunami April ’11 (though the full effects of last year’s Japanese disaster hadn’t yet hit Toyota’s lux division by that month). Lincoln sales fell 12.8 percent last month, and it’s nearly flat, too, at -0.4 percent for the year-to-date.
Meanwhile, Mercedes-Benz had its best April ever. So did Audi. BMW Group is up 13.7 percent year-to-date, with Bimmer sales up 15.7 percent and Mini up 6 percent.
Part of Cadillac’s problem is leasing. GM says 14 percent of the vehicles it moves in a month are leased rather than sold, compared with 19 percent for the industry. Subprime lending is higher, at 9 percent for GM, versus 6.5 percent for the industry. McNeil also points to aggressive luxury car incentives of 10 percent to 15 percent, though I’ve seen some pretty good Cadillac, Lincoln, and Lexus deals lately.
Mercedes, BMW, and Audi have kept their lineups fresh with lots of new product in the last couple of years. If Cadillac and Lincoln want to prove American automakers are more than commodity manufacturers, and disprove what Mercedes tried to do with Chrysler for nine years, the new ATS, XTS, MKZ and updated MKS had better be good.
It’s most important for Lincoln, as it hangs by a Blue Oval thread. Lincoln’s sales totaled just 6308 in April, off 12.8 percent April-over-April, but enough to keep Ford Motor second overall in sales, ahead of Toyota Motor by just 1998 units.
The new Lincoln MKZ, like its platform sibling, the new Ford Fusion, will get all sorts of marketing and advertising support. I’m sure that for their first year on the market, the two cars will do very well. But the Fusion, like the Focus and Fiesta, are designed to be upmarket value cars. Many of the features that will be touted in the advertising will be optional at extra cost. Can the Fusion and the new Escape maintain the sales pace of the heavily discounted models about to be replaced? It will be a very interesting second half of 2012.
One more thing. At least one media outlet reports that Toyota and Chrysler had good months at the expense of GM and Ford. They had good months, yes, but their healthy sales gains compare with an April ’11, when Toyota was starting to feel the effects of Japan’s natural disaster on its supply, and as Chrysler was just beginning to pull itself out of the depths from its bankruptcy. We’re going to see Toyota fight Ford for second place for months to come, while Chrysler tries to fend off Honda for fourth.












