What Luxury Brands Best Hold The Tide While Others Sink? The Truth May Surprise You

It doesn’t take a much of an analyst to realize there is quite a bit of economic turmoil in the US market these days.  With tightening credit requirements and home foreclosures at an all time high, many consumers are feeling the pain in the budget and are making changes. 

Toyota, GM, and Ford have been warning us for quite sometime that automobile sales will remain soft until the housing market financial woes have been overcome.  With the home typically being the largest purchase for many consumers, and the automobile being arguably being the second largest asset for many,  I can see the logic in such a statement for the mainstream vehicle. But what about the others? 

With the luxury market, one might think there would be a bit of insulation from dips in the market place.  After all, one of the rewards of a luxury lifestyle, typically means you have insulated yourself from the bumps.  As an automaker, one of the new factors of your demographic, may be financial stability. After all the more financially stabile your customer base is, the more you can depend upon them to tide you over in tough times. 

So taking that into consideration, it is pretty clear that the woes of the housing market have started to flow into the automotive market. I started charting the major luxury makes back in July to see if there was an insulation factor in place, and below is a summary of what I have found. 

Looking at the groups and the appeal of each brand, it became pretty apparent you can divide the camps up by geographical regions and draw some general conclusions.  While there are always people who cross from group to group, studies show time and again that most buyers fall into three groups because of experience, philosophy, or intangible aspects. Rather that try to explain the appeal of each group I have aligned them according to the geographical regions as follows: 

Pacific Rim: New Money – Are they up to the challenge?

 Comprised of Lexus, Acura, and Infiniti this is the new age of luxury, and arguably each appeal to a specific segment. So how does the new money stack up?  Acura which appeals to the entry segment, has been in a tremendous decline over the last 12 months in parallel with the housing market. So there is little surprise that their loss of sales is continuing. If I were to sum it up, lack of inspiration in the lineup and a demographic most affected by the economy have dealt a serious blow to them.  Lexus in contrast started the year out fairly consistent with marginal increases, but as the economy sours so do their sales.  If you look at the figures, the trend is a rapid decline in sales over the last 7 months.  Infiniti is a bit of a puzzle here, the combination of a limited line up, and  the release of the new G37 caused a brief spike in sales, but it failed to maintain momentum though the last half of the year.

 As a group you can plainly see the automakers in this grouping have obviously suffered from the economic woes in the US. Sales have dropped 6.03% as a group, led by Acura, with Lexus contributing in the middle, and Infiniti flat as a pancake.

Europeans: Old Money – Can past glory save you today?

 The Europeans as a group, have held the gauntlet for the longest, actually creating the luxury market from the beginning.  This by far is the largest grouping of manufacturers comprising of Mercedes, BMW, Audi, Jaguar, Land Rover and Volvo.  While there are some heavy hitters here, there are some big losers as well.  We all know Jaguar is in the tank, and Volvo hasn’t been too far behind, but it is important to note neither of these brands have the widespread sales of the others. So the impact is minimal.  If you thought Land Rover was down and out, then you haven’t been paying attention they actually are rallying for an increase. BMW and Mercedes sales have actually faired far better over the last 7 months than even Lexus. BMW claims the January drop was due to low inventories so only time will show if this blip is a trend or an anomaly.  Audi with its smaller numbers is more affected by lease deals than by anything else it seems.  It may be the most vulnerable of the German makes though due to low sales and the potential to be over run.

 Overall as a group though, the Europeans came out of the turmoil with a 1.5% gain.  If you factor in only the Germans from their American run counterparts, the gain increases to 2.33%.  So the Europeans are taking a hit no doubt, but still on the positive side of the equation.

Americans: Class or No Class - They never get the respect they deserve?

 The smallest group, the Americans arguably consist of only Cadillac and Lincoln.  While Fords woes have been all over the press columns as of late, no one seems to mention that Lincoln is holding its head above water.  Cadillac is also doing the same sporting a slight gain as well. 

 Together, this iconic duo almost eek out a 1% gain over the last 7 months.  Not bad considering both of their parent’s are in the midst of massive turnarounds and funding has to be limited.  Life for these brands appear to dip a bit, but not suffer a catastrophic decline.

Conclusion:
 
If you look overall you can tell that for some reason buried in the demographics you can see that the establishment seems to be holding its own under these dire conditions.  However you can also see that the up and coming also have a way to go when it comes to insulating themselves demographically from dips in the market.  What are the key reasons?  Over stretched consumers or just a more cautious buyer in general?  Who is to tell, but the figures stand for themselves and some people need to do their homework a bit better to keep up.

* All sales percentages are raw figures, not based on DSR (Daily Sales Rate) figures as some maker report.  This gives an equal statistical scale for all brands.  The sales tally is the same, however the percentages may vary from reported increases or decreases based on reporting method.