24 Votes

Has The Great Recession Ruined Luxury Auto Sales Forever?

Agent009 submitted on 9/28/2009 Official Bell & Ross Timestamp: 4:37:33 PM

29 user comments | Category: Misc News | Source: | SOURCE: www.msnbc.msn.com

Timing is everything, or so goes the old saying.

And the timing couldn’t have been worse for BMW when it launched an all-new version of its flagship 7-Series, late last year.

Though the big sedan won praise from reviewers, sales fell way short of the luxury automaker’s expectations. It didn’t help that the big Beemer's debut coincided with the collapse of Lehman Brothers, and the sharp economic downturn that followed.

“Given we have an all-new 7-Series, it’s clearly not doing as well as we wanted,” said Jim O’Donnell,” CEO of BMW North America. “I think some people can still afford it, but when you’re a CEO of a company and you’re laying people off, do you want to be seen driving a new 7-Series?”

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Has The Great Recession Ruined Luxury Auto Sales Forever?

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"If everything seems under control, you're just not going fast enough."
— Agent009 (View Profile)

User Comments

How is doing the 7 against the A8 , XJ and S class, does anybody here know that info?
— Yonder7 (View Profile)

Posted on 9/28/2009 4:54:30 PM | reply to this comment | Votes: 1

BMW 7 Series "sold" 85.3% are leased.
— topneuro (View Profile)

Posted on 9/28/2009 5:43:25 PM | reply to this comment | Votes: -1

Most luxury cars are leased.
— Willis (View Profile)

Posted on 9/28/2009 6:48:14 PM | | Votes: 4

“Most luxury car are leased.”
Not any more, they are now rotting on the lot.
Because most people who lease them cannot afford the leases anymore.
With spiraling car prizes and brutal recession they are no longer cost effective no matter how luxury carmaker try their best creative accounting to entice leasing.
Expensive luxury car in good economy or bad only stand a chance with a lease option.
— topneuro (View Profile)

Posted on 9/28/2009 10:19:02 PM | | Votes: 0

It doesn't matter. The real people with money will continue to have money assuming their smart. Most of the entry level car drivers out there are actually situated in the high end economy level. I think its bad if someone's leasing to pretend you can afford a luxury car. I was leasing my S550 before I bought it out in the end.
— Agent63 (View Profile)

Posted on 9/30/2009 9:52:52 AM | | Votes: 1

A lot of the previous generation 7 series owners that were leasing that car cannot lease the new one.
Lease prices are now closer to $2k a month versus $1,300-$1,500 before.
The car is also much more expensive than before.
— AlexTx (View Profile)

Posted on 9/28/2009 5:48:05 PM | reply to this comment | Votes: 3

hey oo9, why isnt infiniti's symbol not apart of that banner? if acura is in there, infiniti needs to be as well.
— KZ258 (View Profile)

Posted on 9/28/2009 6:10:58 PM | reply to this comment | Votes: 1

Hehe for that matter, why is Porsche their twice? Last I checked they still make seats with carpet.
— Joe_Limon (View Profile)

Posted on 9/28/2009 6:46:33 PM | | Votes: 4

Imagine that: Acura and Infiniti being classified as "luxury." Now there's a good laugh.
— 204E60 (View Profile)

Posted on 9/28/2009 7:47:14 PM | | Votes: -6

Luxury is a subjective term and means different things to different people. Is it HP? Is it premium features in the cabin? Is it handling and/or drivability? Or, is it image? I think its a useless label. Certainly not worth debating.
— SpicyMikey (View Profile)

Posted on 9/29/2009 8:36:19 AM | | Votes: 0

Forever, no. For the foreseeable future, yes.

The combination of an extremely high price along with the perception of lacking any social or environmental conscience has hit 7-series sales like a 1-2 punch. Ouch. That's gonna leave a mark. A big red mark on the balance sheet.
— thstone (View Profile)

Posted on 9/28/2009 6:39:10 PM | reply to this comment | Votes: 1

Agree. Forever is a long time.
— SpicyMikey (View Profile)

Posted on 9/29/2009 8:37:21 AM | | Votes: 1

Not just the world economy but also C.A.F.E standards.
— 1UAW (View Profile)

Posted on 9/28/2009 7:17:44 PM | reply to this comment | Votes: 2

Not forever. Just for the time being. Everything is cyclical, even the luxury car market.
— 204E60 (View Profile)

Posted on 9/28/2009 7:46:31 PM | reply to this comment | Votes: 1

Mercedes is having a hard time “command(ing) the premium that consumers long were willing to pay,” contends Johan de Nysschen, CEO of Audi of America.

de Nysschen said it perfectly. Mercedes-Benz can no longer command such a high premium in a recessionary economic environment. This is also why Mercedes-Benz sales have been getting hammered and why Audi will soon pass Mercedes-Benz in global annual sales.

BMW decided they wanted to compete more with the S-class and chose to raise the price on the 7-series by $5K when the financial markets were collapsing.......BAD IDEA!

The S-class has ALWAYS been the segment leader. BMW had the perfect price-point between the Audi A8 and Mercedes-Benz S-class. Now, the 7-series is too close in price to the S-class (750i starts at $80K while 750Li starts at $85K). The 750Li xDrive starts at 87K.

BMW simply chose the WRONG time and WRONG pricing strategy for the 7-series and we see the consequences they are dealing with as witnessed by dismal sales numbers for a brand-new flagship that was selling like hot-cakes in the old body style.

You know you f*cked up when your new flagship has an extra 100 horsepower, handles best-in-class, accelerates best-in-class, and has a fairly decent interior but can't sell anything close to what the previous model was.
— GermanNut (View Profile)

Posted on 9/28/2009 8:14:20 PM | reply to this comment | Votes: -2

in that case Audi better hope the recession ends soon then -- they have a new A8 coming out, too. Considering the current A8 is outsold about 10-1 by the new 7-Series despite the fact that dealers are flat giving A8's away, we'll have to see how well the more expensive new one does. At least when BMW was giving away 7's before the new one came out they were selling like crazy, as you mentioned. Wonder why the A8 isn't? I know, I know -- it's only a nightmare if it's happening to BMW, when indications are the same thing or worse will happen to Audi it's no big deal.
— JRobUSC (View Profile)

Posted on 9/29/2009 8:20:39 AM | | Votes: 3

ignore that idiot. clearly he suffered from massive cerebral hemorrhage from too much bmw jealousy. look how well he praises the 7-series now. best-in-class this, best-in-class that etc.

i guess there's a lot to be jealous about when audi fanboys can't bare to look at audi's own flagship, a total sales disaster of unbelievable proportions ever since it was introduced 5 years ago. even when it received a facelift last year no one gave a shit about it.

he's just crying cuz no one wants an A8.
— validus00 (View Profile)

Posted on 9/29/2009 11:44:06 AM | | Votes: 1

validius, the current A8 came out in '04 and received the newer front end in '06 ('05 if you got the W12)and refreshed tails in 2008. While true that is sells poorly in the US, nonetheless it is still competitive even at the end of its lifecycle. Furthermore, you can take advantage of its poor resale value and get into a 2-year old model for under $45k in some cases.
— StarSearch (View Profile)

Posted on 9/29/2009 11:51:47 AM | | Votes: 0

So long as there are cars, there will be luxury cars. Otherwise, some economics text books will need to be rewritten.
— JMB1013 (View Profile)

Posted on 9/28/2009 8:35:59 PM | reply to this comment | Votes: 2

i definitely think people are alittle more responsible with the cars they drive now. that last thing anyone wants to do( even someone with money) is sign up for an expensive lease with the economic uncertainty.
even a guy i work with chose an m5 for 1200 a month over an s550 4 matic which was 1500 a month, just to be on the " safe side"
— iamdabest1 (View Profile)

Posted on 9/28/2009 8:43:52 PM | reply to this comment | Votes: 1

question: "Has The Great Recession Ruined Luxury Auto Sales Forever?"
answer: hell no. for now, yes but as long as there are enthusiasts and hope that this current state of recession will someday end we will buy luxury cars again.
— 1dott8 (View Profile)

Posted on 9/28/2009 10:54:04 PM | reply to this comment | Votes: 1

Agree on the lease prices. Premium cars are quite a bit more to lease now, my 745 lease was ~$1100/month but the cheapest lease I have been quoted for the new 7 is around $1600/month way more than I am willing to pay. I'll be going midsize for my next luxury sedan for sure and those leases aren't exactly cheap either. I'm really starting to regret not buying out my 745 after the lease expired.
— stone (View Profile)

Posted on 9/29/2009 10:21:33 AM | reply to this comment | Votes: 3

Don't regret it. The car depreciated like a rock and continues to do so. It couldn't possibly have been worth the buy out price. Also, now you own this very-expensive-to-repair technologically gadgety car. Man, you probably did the right thing.
— SpicyMikey (View Profile)

Posted on 9/29/2009 10:36:26 AM | | Votes: -2

no it has not. People are buying certified pre owned luxury cars. I sell BMW's and are pre-owned business (at our dealership) is up 40% on the year and our new cars are down 15%.
For the 7 series, the 2009's arent selling and the leases are around the same price as the previous bodystyle, around $1450 a month. We have zero 2010's available because everyone wants AWD. We cant get rid of the 2009's, but we are trying to get other dealerships to give us their allocation for the 2010's. I have 9 on order for customers and I am definitely not topping the list of salesman of the month.
I guess only time will tell, but I would either personally lease or purchase a certified pre owned "luxury" vehicle. Unless, I know I am going to stay in the car for about 6 years, then I would buy new.
— 2ndbimmer (View Profile)

Posted on 9/29/2009 11:15:01 AM | reply to this comment | Votes: 2

Not Neccessarily guys.

My Arguement:

As the typical Audi, BMW, Benz, Cadillac, Lexus Luxury brands get more exclusive again, and 3rd tier Luxury brands such as Buick, Chrysler, and Lincoln grow to become second tier brands. People will look for value from a 3rd tier luxury brand.

That will require more people to try newcomers like: MINI, Hyundai, Subaru, and VW. That will also force people to sick with traditional 3rd tier Luxury brands like SAAB, Volvo, and Mercury.

People who were in 1st Tier brands will drop down to Second Tier Brands. People who are buying their first luxury car will be forced to sick with a 3rd tier brand.

Its not the end of the world if you cant buy a BMW, Benz, or a Lexus, as there is a banquet of other brands out there that you can choose from.

They were talking about this on Bloomberg the other night. They predict that some BMW drivers will be forced to drop down to a quality Hyundai or a Volvo in these economic times.
— HyundaiSmoke (View Profile)

Posted on 9/29/2009 4:01:19 PM | reply to this comment | Votes: 1

A Volvo isn't even that bad. The S80 is very well built. Volvo doesn't get enough credit. Their cars aren't the most inspired or most radically designed but they deserve some respect. They are a premium brand regardless.

I also don't think Mercury and Volvo or Saab are in the same class. Volvo is 1 up on Saab and Saab is one up on Mercury.
— Agent63 (View Profile)

Posted on 9/30/2009 9:37:25 AM | | Votes: 1

A Jaguar Service Advisor stated that 70% of Jaguar owners CAN'T afford their vehicles. So...does this mean the pride has fallen?
— Type707 (View Profile)

Posted on 9/29/2009 5:57:49 PM | reply to this comment | Votes: 2

Agent, Im talking about a price range perspective here, as Both Mercury and Volvo have Competitive 3rd Tier Pricing.

Not materials, build quality, or design, as we all know Volvo is still the Current 3rd Tier Luxury Leader, for now. I personally like Volvo, and That seems like the Directon that Hyundai is headed in terms of how it feels. The Controls are even in the right spots like a Hyundai. Mazda is similar too in that respect. Reliablity on the other hand is poor, but compared to the previous competition its good. VW and Hyundai will force companies like Volvo to step the reliablity up.

If I buy a small car for the prices Volvo charges for them, I expect it to work everyday.
— HyundaiSmoke (View Profile)

Posted on 10/3/2009 4:38:37 PM | reply to this comment | Votes: 1

I also expect it to take the 30,000+ miles of punishment I put on cars yearly too.
— HyundaiSmoke (View Profile)

Posted on 10/3/2009 4:40:54 PM | reply to this comment | Votes: 1

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Has The Great Recession Ruined Luxury Auto Sales Forever?

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