Luxury Cars Are a Booming Business

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The U.S. economy may still be struggling in some ways, but you wouldn't know it from looking at luxury-car sales.

Global luxury-car heavyweights Mercedes-Benz and BMW (NASDAQOTH: BAMXF  ) , the reigning champ, are locked in a fierce battle to lead the U.S. luxury-car market in 2013. Both reported strong sales here in the first quarter -- and several of their rivals posted big gains of their own.

A small market that generates big bucks
The sales volumes are relatively small. In some months, Ford's (NYSE: F  ) sales of F-Series pickups alone are greater than the total U.S. sales of these two put together. But thanks to impressive margins, luxury cars are big business here and around the world, and BMW and Mercedes, along with Volkswagen's (NASDAQOTH: VLKAY  ) Audi brand, are the Big Three that seem to dominate it just about everywhere.

BMW posted a 13% gain in U.S. sales in March to 27,078 vehicles, marking BMW's best March in the U.S. ever. That increase was powered in large part by gains for its SUVs -- the X3, X5, and X6 in particular, which were together up 40% over year-ago totals.

That's a strong showing, and the company is optimistic about its chances for further gains in the coming months. BMW's North American chief, Ludwig Willisch, said in a statement that he expects the new entry-level 320i model to "accelerate our momentum in the months ahead."

Meanwhile, arch-rival Mercedes-Benz posted a 6.5% year-over-year sales increase for March, with 24,646 sold -- enough for its own record March and first-quarter totals. Strong points were the 34% gains for the company's C-Class sedans, which compete directly with BMW's 3-Series, and a nice result for the company's M-Class SUV.

Mercedes, which is owned by Germany's Daimler (NASDAQOTH: DDAIF  ) , made much of the fact that it posted record sales without launching any new models in the first quarter. The company's U.S. sales chief, Steve Cannon, noted in a statement that coming launches of redesigned E-Class and S-Class models could lead to Mercedes' "strongest year on record" as 2013 continues to unfold.

Other luxury makers are looking strong
Meanwhile, German rival Audi merely posted its 27th straight month of record sales in the U.S., with a 14% gain over good year-ago totals. Continuing the theme, small sedans and SUVs were strong for Audi as well, with a 20% gain for its A4 and a 39% increase for the Q5 SUV. Those gains were achieved with minimal discounting, Audi officials noted, as VW continues to try to maximize its profits outside its troubled European home base.

Toyota's (NYSE: TM  ) Lexus brand posted a 16% gain for the month and a 15% gain for the quarter behind strong sales of its ES midsized sedan. And General Motors' (NYSE: GM  ) Cadillac brand continued its slow resurgence, as its ATS sedan -- a surprisingly strong competitor to BMW's 3-Series -- led the way to a 49% year-over-year gain.

Keep watching the auto market in 2013 to see whether luxury vehicles can maintain their sales strength.

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Read/Post Comments (6) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2013, at 1:41 PM, TMFMarlowe wrote:

    @mylove4life45: Your assertion isn't accurate. A lot of $60k cars are leased, and not by billionaires. Read the article, and note that these luxury brands are only now matching or breaking sales records set before the crash, just like the mainstream brands.

    John Rosevear

  • Report this Comment On April 07, 2013, at 2:04 PM, birder1500 wrote:

    The economy is not struggling for those that can afford those types of cars. It is doing just fine for them. The economy is struggling only for the other 80%.

  • Report this Comment On April 07, 2013, at 5:16 PM, chrisausten wrote:

    Well, first...To the two posters above who think that a $60k car is a car of the "filthy rich"...I have news for you...these days, even American luxury cars can top out in the lower to mid $50's when fully loaded.

    Second....I see that Lincoln is not even in the running here, which is no surprise. As the British might say, Lincoln has become redundant, primarily due to the short sightedness of Ford execs. who seem to be caught up in some sort of mid-life crisis and have grand delusions of selling lots of Lincolns to 30 & 40 somethings..."it ain't gonna happen". Lincoln will remain on the back burner at best, until which time, if any, that they return to it's roots....Lincoln has always been a "country club" car, not a "yuppie" car. The only way Lincoln will become relevant again is to restore that formal "tuxedo" look to the it is now, it has all the charm of a mid 80's K car.

  • Report this Comment On April 07, 2013, at 5:36 PM, danno228 wrote:

    Motley don't read to much into this market. Sixty-five percent of luxury car sales are leased.So what do say about that?

  • Report this Comment On April 07, 2013, at 6:06 PM, trust1234 wrote:

    Those aren't luxury cars everyone has them.

  • Report this Comment On April 08, 2013, at 3:41 AM, GETRICHSLOW2 wrote:

    Last July my wife and I bought a 2013 Mercedes E350 convertible. We special ordered it and it was the first 2013 model sold at our dealership. Had to wait a week for it to released. Most beautiful car I have ever seen. We love it!

    I am just an everyday blue-collar working stiff and my wife has not worked outside the home for the past 9 years. We were able to afford the car because we both busted our butts and made the necessary sacrifices for 13 years to save up the money. That's right, we paid cash. Not even a trade in.

    It can be done. You just have to want it bad enough.

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