Tesla's Model 3 Is Making A Serious Dent In The Entry Level Luxury Market

Although most of this decline is consumers switching to SUVs, not model 3s

So true, plus if you add the sedan and sport coupe together, it also alters the picture of what is happening.

Yet Model 3 sales seem just fine. Obviously more than just a switch to SUVs is at play, especially if you look at the top trade in vehicles for the Model 3.

Oh, and you neglected to mention that now Tesla is being investigated for sudden acceleration

That we did, 4 posts earlier

Sorry, there are so many Tesla posts here I lose track.

That Model 3 sales number will continue to climb globally. You can't ask for a better chart than that if you are Tesla. Haters will continue to hate and the firm will continue on building up it network of factories to make all the Model 3's and Model Y's the world wants.

The drastic drop in Euro sedan sales coincides with the opening up of Model 3 Order deposits going online. This is no accidental market function- this is a drastic market disruption taking place.

Yes, to SUVs

The truth is that its a combination between people leaving the luxury sedans for SUVs and Models 3s. The model 3 is a success, no doubt about it and sales will dramatically increase specially in China.
Personally I think they are excellent electric cars but they look too generic and their interior are cheap when compared to some of the ICE options.

This is a prime example of what is commonly known as "association-causation" fallacy....

The idea that "correlation implies causation" is an example of a questionable-cause logical fallacy, in which two events occurring together are taken to have established a cause-and-effect relationship. This fallacy is also known by the Latin phrase cum hoc ergo propter hoc ("with this, therefore because of this").

Sales numbers started trending downwards for entry level luxury cars long before the Model 3 was on the scene.

A much more relevant graph would compare all three vehicles in Tesla's lineup (Model 3, S and X) and their sales - which would clearly show that the Model S and X have been totally cannibalized by the Model 3.

Spoiler - the Model Y will similarly cause Model 3 sales to tank.

Tesla customer base (which is more or less finite) want the 'new thing' and, by the way, since Tesla does not invest in its existing products, they almost have no other choices. Tesla has become a 'one-product-line' car company.

Model 3 definitely cannibalized some S/X sales and that's fine. Heck, I would buy a performance 3 over an entry level S, hands down. The Y will likely do the same with the 3 once supply can match demand, especially if the price is similar. Many people would pay an extra $2k for a crossover with a lot more space, especially when the performance and range sacrifices might be less than what you'd expect.

So what? It's better to disrupt yourself with higher value products than let your competitors do it. Imagine if IBM held back computers to protect their typewriters.

Big fish in a shrinking small pond.
Meanwhile:
https://wolfstreet.com/2020/01/16/tesla-hit-by-sagging-us-sales-goes-full-china-with-design-center-factory-loans/
As for numbers, since TSLA fails to be transparent, the "success" referenced in the post, like nearly all things TSLA, must be taken with a grain of salt.

Actually, tesla sales increased only 0.3 percent in 2019 vs 2018. MB, BMW, Volvo, Audi, Lincoln, Cadillac all gained market share. So much for tesla wrecking havoc on the luxury car market.