BMW and Mercedes Buyers See a Ford in their Future (Bloomberg)

Discussion in 'Economics' started by ByLoSellHi, Jun 12, 2008.

  1. BMW Buyers in U.S. See a Ford in Their Future: Chart of the Day

    By Greg Bensinger

    June 12 (Bloomberg) --
    Even the most affluent buyers in the U.S. are thinking twice before shelling out $76,000 for a new BMW 750i sedan, data from industry analysis firm Autodata Corp. indicates.

    U.S. sales of luxury autos this year have declined more steeply than for the industry as a whole, suggesting gasoline near $4 a gallon has been a deterrent to all consumers.

    Purchases of luxury autos were down nearly 100,000 units, or 14 percent, through May 31, compared with an 8.4 percent drop in all U.S. sales. Industrywide sales may be headed to their lowest total in 15 years, according to Ford Motor Co.

    The chart of the day illustrates the monthly declines in sales of luxury vehicles, such as Daimler's Mercedes Benz S- Class or Honda Motor Co.'s Acura RL cars, compared with those for lower-priced competitors, including General Motors Corp.'s Chevrolet Impala.

    ``This gas panic has extended even to luxury buyers who are deciding they'd rather step down to a Ford with all the amenities rather than get a new Mercedes,'' said David Healy, an equity analyst with Burnham Securities Inc. ``I don't think we'll ever get luxury sales back to where they were historically.''

    Deteriorating luxury demand may hurt profits for automakers such as Daimler AG, Toyota Motor Corp. and Porsche SE, which depends on the U.S. for about 40 percent of its global sales. Luxury autos, broadly defined as those selling for $40,000 or more, represent about 10 percent of industrywide sales.

    ``We expect declines this year in the luxury market, there's no doubt about that,'' said Detlev von Platen, chief executive officer of Porsche Cars North America. Porsche sales are down 15 percent in 2008's first five months, according to Woodcliff Lake, New Jersey-based Autodata.

    U.S. gasoline prices jumped 31 percent this year through the end of May to an average of $3.98 a gallon and reached $4 on June 7, according to motorist group AAA.
  2. That's not a surprise. No one knows how high crude oil can really go. Gas surely won't be 80 cents a gallon (how it was in New Jersey over a decade ago). Plus why buy such an expensive car when you also may need to pay the gas tax... But this is all short-term.

    That being said, the economy operates in cycles. Obviously right now is not the time to be purchasing luxury goods. Who knows about the future when the economy ultimately improves. History repeats itself, so there will be a better day.

    People will always drive cars. Ford made low quality cars, however. Although I'm not a fan of Mercedes after Daimler took ownership, their cars are still superior to American ones like Ford. People are willing to pay more for a quality product.
  3. What that tells me is a good chunk of the luxury buyers are individuals who are not all that wealthy, rather than belt tightening by fat cats.

    It would be interesting to see a snapshot of the demographics of luxury buyers/leasers. I'd bet the numbers would be surprising.
  4. Joab


    Sold my Lexus and Hummer and happily driving a 2009 Prius.

    Literally cut my gas bill by 2/3 's and loving it.

    $150 per month vs $450 :)

    Up your ass, Exxon and Bush !!!
  5. 11Blade


    I agree, the uber-rich are immune, its the HELOC stretching wanna-be's that were driving volume in the mid to high end car market(<$100k)
  6. Very SHARP observation
  7. S2007S


    "Luxury Buyers" I would say most are leasing those luxury cars.

    You can least most cars in the 34k-40k price range for $350-$400 a month.

    I see young drivers driving infiniti, BMW, mercedes, lexus and audi all day long.
  8. BMW's suck...

    quality is going down the tubes...

    would rather buy a Toyota...
  9. 50_Bip


    Yeah, you'll look like a real coast-to-coast player in that Camry instead of that 7-series..

  10. That's old school. No More Cycles.... just money-pump, deficit spend, inflation, and live on credit until we implode. No more "cyclical contractions" orchestrated nor tolerated.
    #10     Jun 12, 2008