Lexus Leads March U.S. Luxury Sales as SUVs Bring In Buyersby
Japanese brand is close second to Mercedes for the quarter
Fuel economy, interest rates aid larger models, analyst says
Toyota Motor Corp.’s Lexus, bolstered by demand for its sport utility vehicles, sold the most luxury autos in the U.S. for a second straight month in March, closing in on Mercedes-Benz’s first-quarter lead.
None of the three largest sellers of premium vehicles in the U.S. had a gain for the month. Lexus deliveries fell 2.8 percent to 30,198, even with increases of 25 percent for its NX compact SUV and 46 percent for the LX. BMW AG’s namesake brand reported a 12 percent drop to 30,033 while Mercedes posted a 5.9 percent decline to 28,164.
“Look at luxury according to segment mix,” Kevin Tynan, an analyst for Bloomberg Intelligence, said in an interview before the carmakers released results. “Truck is holding up much better and I think that’s a fundamental shift in what we’re buying.”
Lexus outperformed its two biggest rivals as its SUV sales climbed 9.5 percent while the brand’s car deliveries slid 14 percent. SUVs are benefiting from fuel efficiency improvements that are driving an appetite for larger models, Tynan said. Cheaper interest costs are also helping to spur demand, sending the rate of leases for premium models to near record highs.
“The driving dynamics are much better, fuel economy is much better, so essentially they’re trucks that ride like cars,” Tynan said of luxury SUVs. Lower interest rates are “creating affordability for more expensive vehicles, so more people have access.”
The drop in sales for the three premium brands comes as industrywide results for the month broadly lagged analyst estimates. The slower sales may be a sign that automakers are tempering gains after a record-setting run last year.
For the first quarter, Daimler AG’s Mercedes held the top spot in luxury deliveries, followed by Lexus and BMW. The third-place spot for BMW stands in contrast to its ranking last year, when the brand won the annual luxury title. The figures exclude BMW’s Mini models and Daimler’s work trucks and Smart cars, which aren’t luxury vehicles.
“It’s been a tumultuous first quarter of the year for business in the U.S. with plenty of volatility even in the premium vehicle segment,” Ludwig Willisch, BMW’s chief executive officer for North America, said in a statement.
Some luxury brands did manage gains in March. Nissan Motor Co.’s Infiniti said sales rose 10 percent to 13,775 vehicles. Volkswagen AG’s Audi reported a 7.5 percent increase to 18,392 cars and SUVs, the brand’s 63rd consecutive month of record deliveries.
Randy Parker, vice president of Infiniti Americas, cited consumer confidence, even as a measure of that sentiment dipped slightly in March -- a third straight decline -- as concerns persisted that the U.S. economy will cool.
“When consumer confidence is high, that bodes well for the premium space, and we’re taking advantage of the wave,” Parker said.
Scott Keogh, president of Audi of America, said the rate of potential buyers who say they’ll consider the brand has doubled to 68 percent, helped by new products and dealer improvements. That has bolstered Audi as its corporate parent struggles after admitting to cheating on diesel-emissions tests.
“When a strong brand that’s doing well goes into a storm, it’s able to navigate through it,’’ Keogh said. “But to me this isn’t just a business issue. It’s a trust issue that I want to make right.’’