The tough automotive climate has been a real drain on the economy. Along with a plunging housing market and consumer concern over high gas prices, the cost of material goods, and food, the toll has been evident throughout 2008: we're weathering a stiff economic downturn.
Luxury Brands Take A Beating
One segment of the automotive industry getting whacked has surprised some analysts. Luxury vehicles, those cars made by Cadillac, Lexus, Mercedes, Lincoln, Infiniti, BMW, Jaguar, Acura and other high end brands are also seeing a sales retreat, perhaps signaling that the rich pull back in tough economic times too.
But, a closer look at the picture reveals some other things which may be dragging down sales. Let's take a look at some key factors driving current luxury car selling trends through the first eight months of this year:
Not every buyer is rich - Though a car may be a luxury brand, that doesn't mean that only the rich drive these models. For example, the Cadillac CTS is a midsize luxury car with a beginning sticker price in the low 30k range. Lots of buyers are middle class Americans, people who appreciate fine cars, but who don't necessarily make more than $100,000 per year. Some of these buyers are waiting for year end specials or pushing off their purchases until the economy improves.
Many luxury cars are not efficient - When you think of luxury, do the words “small" and “nimble" come to mind? No. Instead, most vehicles are powered by V8 and V6 engines, just the type of car that gets 15 mpg around town. Very few luxury cars are powered by fuel efficient four cylinder engines; luxury vehicle drivers are also feeling pain at the pump. Newer cars with smaller engines are on the way, but will consumers turn to little engines to power their upscale rides?
Competition is fierce - At one time, Cadillac and Lincoln owned the luxury car market with BMW and Mercedes making inroads over the past twenty-five years. More recently, Japanese luxury brands including Acura, Infiniti, and Lexus have sprung up, expanding the market. As overall demand drops, the major players are competing with each other, but aren't necessarily slashing prices either.
A Rebound Is Coming
It won't take much of a bump in the economy to send luxury cars soaring once again. Indeed, there are signs that the market is stabilizing as BMW's sales for the year are actually up, albeit by only 0.9%.
When luxury car sales start to increase, look for the rebound to spread throughout the market. Of course, retreating gas prices will play a significant factor in a positive change, therefore if gas drops below $3 per gallon, then sales are certain to follow.
Copyright 2008-2012 - Matthew C. Keegan is the owner of a successful writing and marketing business based in North Carolina, USA. He manages several websites and is a contributing writer for Andy's Auto Sport, a retailer of quality Lamdo doors and ground effects .