The luxury auto market is doing quite well on the coattails of a prospering overall auto market and improving economy. For August 2014, luxury auto sales posted a gain of 2.5%, (which does not include Tesla Motors, since monthly sales data for Tesla from last August is not available).
When auto sales start to slip, then I think investors can start to worry about the overall economy. But so far, this is far from the case. According to the Detroit Free Press: "U.S. consumers continued buying new cars and trucks at a torrid pace in August as easy credit and a wave of new products fueled showroom traffic, driving the industry's annualized rate above 17 million for the first time since July 2006."
In the month, 1.58 million vehicles were sold, good for a 5% increase year over year, according to the Detroit Free Press.
In other words, luxury sales did OK, but not as good as the overall market. Between the top 15 brands, roughly 172,000 units were sold last month, a 2.5% increase from the approximately 168,000 units sold in the same period last year, (again, excluding Tesla). Have a look below:
As you can see above, Toyota's (NYSE:TM) Lexus was the top brand in August by sales, selling 32,809 units, good for 19% of the luxury auto market. This edged out BMW (NASDAQOTH:BAMXF) and Mercedes-Benz, which captured 15.8% and 15.7% of the luxury market last month.
Below is the overall year-to-date change in sales. Perhaps not surprising, Lexus is leading the way. Ford's (NYSE:F) Lincoln is also doing well, climbing some 13.5%. It's nice to see this brand making somewhat of a comeback after struggling in 2013, when sales fell 0.6% but overall auto sales climbed 7.5%.
Overall, the luxury auto market is dominated by the foreign automakers. Lexus, Mercedes-Benz, BMW and Audi round out the top four spots when it comes to total market share for the month.
By having a rock-solid reputation for quality, as well as stylish looks and plenty of model choices that range from entry-level to upper-echelon lifestyles, it's not hard to see why these four automakers continually dominate the market-share pie.
What else stands out?
It's somewhat troubling to see General Motors' (NYSE:GM) Cadillac brand do so poorly. The automaker saw its year-to-date sales change more than double, from negative 2% through July to down 4.7% on the year after August. Perhaps that's not too surprising, given the fact that Cadillac sold 17.8% fewer vehicles last month compared to August 2013.
This is a stark reversal to what appeared to be Cadillac's newfound success, with sales surging 22% in 2013. Sales of the ATS and XTS, two of the three top-selling models for the automaker last year, have slumped 20.3% and 22.5%. The CTS has seen sales fall 6.2% through August, despite winning Motor Trend's Car of the Year award.
Perhaps with the Cadillac at price points similar to Audi, Mercedes, BMW, and Lexus, consumers are deciding to leave the American luxury automaker in favor of the foreign luxury cars. After all, the reputation for these four brands seems to be on much stronger ground than that of General Motors', due to all of GM's recalls this year.
While August is generally a good month for auto sales due to new model introductions and markdowns on older models, I don't really think there's much reason for sales to slow down in September.
In fact, heading into the fall season, I would expect sales to increase slightly over last year's results. Part of the reason is simply because the economy has been gaining steam throughout the year. Also, gasoline and other commodity costs have been coming down dramatically, easing the stress placed on consumers' spending cash.
Even though gasoline prices falling $0.30 or $0.40 per gallon only translates to a few dollars at each fill-up, consumers may feel more optimistic. A positive outlook on the economy and their own finances may be enough for some of them to look into a new car.
Finally, I would expect year-end sales and promotions to continue through September, hopefully pushing overall sales higher. Last year, the luxury auto market eked out a gain of just 0.83% for the month compared to September 2012.
This is better than the overall auto market, which saw sales slide 4.4% in September last year. Although, it's only fair to point out that sales did rise almost 13% in the year prior, which makes for a tough comparable beat.
Despite the high bar to beat, luxury auto sales were able to produce a gain last September, and I think they can do the same this year. Possibly, luxury sales will beat overall sales, on a growth percentage basis. Stay tuned.
Bret Kenwell owns shares of Ford. The Motley Fool recommends BMW, Ford, General Motors, Nike, and Tesla Motors. The Motley Fool owns shares of Ford, Nike, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.