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.

Agent009 - 2/8/2008 1:06:52 PM

+5 Boost

They are visual of the percentage of increase or decrease per month per brand as compared to last year.

Basically how are you doing compared to last years performance.

Hwany - 2/8/2008 3:40:54 PM

+2 Boost

Stop trolling here and go study. I guess since your dad is not so rich, you should study harder to at least drive a GS.

Porschinator - 2/8/2008 4:43:36 PM

+1 Boost

True. Only way to show increase is to compare to last years sales month by month for short term. True sales trends are typically 3 - 5 years.

moto - 2/8/2008 5:32:52 PM

+1 Boost

Porschinator - you mean model year sales trends. Every redesign typically offers a small bump in sales, and these occur every 3-5 years. Good point nonetheless. Looking at only 2 years of sales data isn't a perfect indicator, especially for small brands like Audi who have introduced significant changes in its lineup in the last couple years.

autopro - 2/8/2008 1:10:46 PM

0 Boost

Lexus planned for a flat 07 and still had an increase,but they planned for 08 to be flat.It looks like if the press keeps using the "R" word everybody's going to drop.Hopefully when spring weather comes,things will pick up.If things stay slow than the incentive game will heat up.

Anthony - 2/8/2008 1:13:18 PM

+1 Boost

All this number crunching to soothe some superiority complex of the Asian luxury brands not doing as well as "the establishment?"

It is kind of interesting though. People who typically buy European luxury brands will continue to buy luxury brands, while other foreign luxury brands are less immune to economic woes. Although I feel all of this is to say that people buy European brands because they like them, and they only buy the Asian brands because they need them, or some other underlying complex issue I am not fully understanding...

Agent009 - 2/8/2008 1:41:23 PM

0 Boost

I think it is more complex than that and I doubt we will ever know what some brands continue to move up while others falter when times go bad.

This is especially true of Lexus who has an older and assumed more stabile clientele. It is possible these older buyeer simply hold off when times are bad by nature.

Acura though has a much younger base and the argument can be extended to say these buyers may tend to over extend themselves more and now feel the pain, or simply a less established credit history could come in to play.

KZ258 - 2/8/2008 1:21:44 PM

-1 Boost

set on average, too btw

w209w114 - 2/8/2008 1:25:22 PM

-3 Boost

Congrats to BMW, Mercedes, and Landrover. No coincidence they are the best of the bunch.

BMW4me4ever - 2/8/2008 1:38:48 PM

+6 Boost

Josh ... we know we know. Your dad is buying the Lexus IS250 and for some reason you think it is faster than every BMW & Mercedes 3-series. Still dillusional as ever.

henbmw - 2/8/2008 1:41:10 PM

+4 Boost

^^ Wow.

Agent009 - 2/8/2008 1:42:24 PM

-1 Boost

I think an IS350 is a better match up

TauronB2G - 2/8/2008 1:56:45 PM

+6 Boost

Josh-
Your dad has been about to buy an IS250 for some time now. Tell him to get on with it.
T

Htay7500 - 2/8/2008 2:36:22 PM

+6 Boost

who cares about your dad? why can't you get an IS yourself? and whats so special about it?

w209w114 - 2/8/2008 2:37:39 PM

+2 Boost

Child, what are you talking about? I dont have a C230. My car is at least 20K more than your daddy's base IS250 entry level Lexus.

Hwany - 2/8/2008 3:42:53 PM

+5 Boost

lol... IS250... and he's bragging about it. I don't see anyone who has an IS250 brags about it so much.

IS250 is nothing to brag about. When your dad becomes successful (doubtful)and get a LS600h or something along those line, come back and brag.

theoptimisticpessimist - 2/8/2008 1:56:21 PM

0 Boost

Thanks for the research. It going to be an interesting year, economics look bleak, for premium cars.

Congratulations Acura you weren't last,you out preformed Jaguar! Pathetic.

supermoto - 2/8/2008 2:02:10 PM

0 Boost

RIP Jaguar!

chuck717 - 2/8/2008 2:18:35 PM

+2 Boost

There will always be a class that can aford just about what they want, but for the vast number of people who wanted to play big wheel all is ending.
Lending for homes and cars are now getting very tight, over priced homes are going begging prices are sinking as i post, and high lease cars will only be leased by business people who really have to lease for tax puposes, the pretenders better start a stampede to cars thet can afford the gravy train of dumb bank loans is over, back to reality for most as it should be?

Agent009 - 2/8/2008 3:07:11 PM

+3 Boost

We saw this happen when the IT sector crashed a few years ago.

All of the overpaid dropped thier BMW 5-Series for Corollas.

Targa - 2/8/2008 2:39:09 PM

0 Boost

With the current financial climate, this does not surprise me too much. What will be interesting will be to see what this year holds for them all.

I don't think this is a knock against any one brand, but you can see that that more established brands are the ones doing better than the upstarts (all relatively speaking of course). Also, some of the more established brands already cater to a larger demographic than some of the others. Take BMW as an example. 3 series appeals to the younger crowd while the 5 and 7 series may appeal more to the older crowd.

Infinity, which is holding up the best of the upstarts, has cars that appeal to the younger generation.

Not sure if that is really the issue, but it makes sense.

Agent009 - 2/8/2008 3:11:36 PM

+1 Boost

I thought of sorting it by the owners of company reflecting management style lumping Jaguar, Land Rover and Volvo under Ford's banner.

But that made the German's look too good, and I knew protest would ensue.

no1listensanyway - 2/8/2008 2:47:52 PM

0 Boost

This is clearly an Economic issue, having really nothing to do with car companies themselves.

Agent009 - 2/8/2008 3:12:34 PM

0 Boost

I tend to differ. If you appeal to an established buyer you will be less affected than trendy buyers.

no1listensanyway - 2/8/2008 10:38:18 PM

+1 Boost

Differ you may, ask any economist, the first part of the economy to get hit during a slowdown is high priced goods.

no1listensanyway - 2/8/2008 10:38:19 PM

+1 Boost

Differ you may, ask any economist, the first part of the economy to get hit during a slowdown is high priced goods.

Agent009 - 2/8/2008 3:45:03 PM

-1 Boost

It is an acknowledgement that the Pacific Rim Brands are here to stay and past reputation isn't as important as it was.

fuzion - 2/8/2008 3:37:30 PM

0 Boost

Explain how we have current numbers for months we have yet to go through in 2008, or is this already a year old study from 2007 based on figures from 2006?

Tards. Next.

Agent009 - 2/8/2008 3:46:00 PM

-1 Boost

It is a trend analysis and the figures are from 2007 and 2008. How else would you compare?

fuzion - 2/8/2008 5:13:24 PM

+2 Boost

I guess i'm just an idiot but.. how do you make a report that includes trends from the future?

There are "current" numbers from December, November, etc. If they're current that means.. up to date, since we're only in Feb 2008 how are the numbers for the months we haven't gone through yet current?

XYZZ - 2/9/2008 3:08:25 AM

+1 Boost

Fuze does have a point. jan 08 compares against jan 07.

but for dec and ALL EARLIER months, it has to be 07 vs 06.

1970toyotamarc - 2/8/2008 4:01:42 PM

+3 Boost

So basically BMW had two stellar months in 2007, July and August, that skews the numbers so highly in their favor, and of course thus 009 starts his figures in July. 009, the master of statistics.

Possibly, it could just be that BMW's 2006 July and August had such poor sales, which would lead to the huge percentage jump in 2007. But that cant be, o except that it IS THE CASE. In July '06 BMW sold so few that it even sold less than Mercedes, which never happens. Caddy almost beat them in July '06.) They were probably just low on inventory.

I do not hate BMW. Let me repeat, I do not hate BMW. But the BMW apologists on this site are out of control.

Dont think your work is unappreciated, 009. I love all this stuff. But as with all statistics, it deserves some critical analysis.

Agent009 - 2/8/2008 4:41:44 PM

0 Boost

Well all it takes is a few horrible months to ruin a complete year as well.

You have to look at the overall picture and even as far back as a year ago, prople were losing their houses but keeping thier cars. Now they can't even get a car as the lease runs out. That is a lost customer.

I just analyzed the figures and tossed them out there and ask for input.

bmwfan1513 - 2/8/2008 5:23:42 PM

-4 Boost

BMW is the best.

TYG23 - 2/8/2008 8:23:58 PM

+1 Boost

Just a thought. Current Acura TSX and TL models were released in April 2003 and October 2003. They are both being re-designed for 2009 model year. When the TSX was first introduced it was compared to luxury cars costing $7000 more, why, because it had the same content. MBenz boast about new technology on their C class, options like blue tooth and dvd audio. Are you kidding me? Acura offered these items on the 04 TL (standard). Not to mention the first production cars to be equiped with Bluetooth, DVD audio and real time traffic on the most comprehensive and user friendly Navigation System. These sales #s represent a decline for Acura due to old product. 3 years ago the TL was the #1 selling luxury car passing the BMW 3 series and lexus ES. When the new 3 series came out it passed the TL and the ES. It is a round and round circle based upon intoduction of new models.

If all manufacturers released new models at the same time, then we would be able to compare sales stats like the ones above.

XYZZ - 2/9/2008 3:16:46 AM

+1 Boost

"These sales #s represent a decline for Acura due to old product. 3 years ago the TL was the #1 selling luxury car passing the BMW 3 series and lexus ES. When the new 3 series came out it passed the TL and the ES. It is a round and round circle based upon intoduction of new models."

this does tend to be true. look at the sales of full size pickups. the most recently refreshed/renewed brand always sees the best increase.

this past year, Tundra and the gm twins were all new. that tundra gained while the gms lost could be an anamoly, but more likely the change from '06 to '07 was more DRAMATIC with the tundra. plus, tundra DOES have more advanced engines; dohc on all versions, vs gm still using pushrods. (against that, tundra doesn't have a diesel. yet.)

bottom line, the freshest models tend to show the better gains. or least declines (all domestics dropped; and this can be attributed to the economy).

MPowerDK - 2/9/2008 5:08:30 AM

+2 Boost

Its funny that things change, for about 15 years ago Volvo was the best selling in the US, now they dont sell much cars, or others have taken over. BMW has done a great job, but im sure it will change some day, there will be som replacement in the top 5.

thisismyname - 2/9/2008 10:57:00 AM

+1 Boost

"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? "

Just FYI, 99% of the time a car is NEVER an asset to a customer... If it makes money for you it is an asset. If you are dumping money into it for years and years, and then sell it for a fraction of the price you purchased it for it is a liability.. not an asset.

It's a common mistake to assume a car is an asset, it is purely a liability. The car costs you money hence it is a liability.
A collector car, stored, never driven and in mint condition is arguably an asset, if it cost you 20+ grand to keep that car insured in a climate controlled storage for the past 25 years. You would have to be looking at the appreciation cost of the car, vs. the purchase price, storage and maintenance of the car, insurance etc... Hence why a collector car is still not necessarily an asset.

Asset = makes you money, ie. investments, real estate, fine art.

Liability = costs you money, or depreciates in value once purchased ie. CARs, electronics, Play things (boats, 4-wheelers, etc.)and daily frivolous items.

Buy a car, any new car..add up all the gas, insurance, car washes plus the initial purchase price.. Do you think you will sell the car for more than that after you have driven it? no.. hence a liability.

S4cabriofoxone - 2/10/2008 10:10:51 PM

+1 Boost

"The latter two don't even try to hide the fact their cars are rebadged."

Unless you're talking about the Lexus LX and Infiniti QX...

???

Infiniti's design theme is far more distinctive than Lexus's. However, both brands share a resemblance with their parent companies; Toyotas and Lexuses look like they were designed by the same people, and that is also true of Nissan/Infiniti. That's pretty true about Acura and Honda, too, but the only cars any of them sell that are truly "re-badged" are the LX570 and QX56, and depending on how you look at it, the TSX and RL.

montyz81 - 2/11/2008 10:54:45 AM

+1 Boost

Actually the TSX is a direct rebadge as it is an Accord in Europe. Also, the GX and the JDM Land Cruiser are exactly the same cars. Again, just a rebadge. Both share the same platform and engine as the 4Runner.