Who Will Be The Biggest Loser In The Luxury Car Market For 2008?
Most manufactures have already chalked 2008 as the year they would rather forget than remember. We all like to rally behind our favorite luxury Marque and marvel at the new offerings and impressive sales gains they typically post year in and year out. However with five full months of dismal reporting remaining, and precious few new models on the horizon, we all now realize this is a tough year to post any gains at all. The market place has forever changed I am afraid.
Over the years leasing has become ever increasingly popular in the luxury market. With outstanding residuals and low interest rates, luxury Marques found it easy to appeal to the entry level of the market with excellent lease rates. So well in fact, I penned an article last year showing it was actually cheaper to have a BMW 3 series over a Toyota Camry over a typical lease. Needless to say I wasn’t the only person to notice as luxury car sales continued to skyrocket.
However with rising fuel prices and a deteriorating credit market we have seen changes. Most notably the stepping away from leasing by the American Big 3, and several manufacturers setting aside billions of dollars in funds to cover artificially high residuals. Leasing it turns out is a risky proposition to say the least. While it seems no one will be left unaffected to a degree on the current leasing debacle, the question remains just how many buyers were simply capitalizing on low payments for different motives. Whether customers were snapping up luxury cars that were previously unaffordable, or because they always were going to purchase one anyway remains to be seen.
In Texas we call some of these opportunists, “$30,000 millionaires”. You know the type, that cute single secretary down the hall making about $32K while driving a $80k Escalade. Typically one would associate a modicum of income in relation to ownership of such an expensive car. In this case the formula simply doesn’t fit, the low lease rates had changed the landscape of ownership into a boon of subsidized vehicle sales. After all we all want to look and feel successful, it is a natural progression. So in essence have we created a class of wannabes with no real avenue in to the luxury market other than a subsidized lease?
Now with tighter credit and leasing dramatically curtailed will those Marques that benefited the most from this new class now falter even further? A scary proposition to say the least.
It’s all up to demographics. Does the current 60% leasing rate of new BMWs leave their customers vulnerable to the higher costs of financing, or will they simply pay cash? Are the 43% of those leasing Lexus vehicles simply Toyota owners attempting one up their neighbors with no addition funds to support this perceived wealth?
Who will survive and who will falter the most when their customers simply have to go some place else to stay afloat? To be honest only time will tell, but we want to give you the opportunity to tell us who may end up on the bottom, when and if their customer base makes them the “Biggest Loser”.
Take your vote, and make it count, then tell us why you believe who will suffer worse.
Copyright 2026 AutoSpies.com, LLC