{"id":50117,"date":"2017-11-02T05:41:38","date_gmt":"2017-11-02T05:41:38","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=50117"},"modified":"2017-11-02T05:41:38","modified_gmt":"2017-11-02T05:41:38","slug":"luxury-auto-brands-are-scrambling-to-avoid-a-blue-christmas","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/luxury-auto-brands-are-scrambling-to-avoid-a-blue-christmas.html","title":{"rendered":"Luxury auto brands are scrambling to avoid a blue Christmas"},"content":{"rendered":"

Luxury auto brands are scrambling to avoid a blue Christmas<\/span><\/strong><\/span><\/h2>\n

Luxury auto brands are scrambling to avoid a blue Christmas: Consumers have gradually shifted over to luxury sport utility vehicles from sedans in the last decade, but the trend – which has occurred in both the non-luxury and luxury segments of the auto market – was particularly pronounced in October.<\/span><\/p>\n

Sales of Daimler AG\u2019s (DAIGn.DE) Mercedes-Benz S-Class, long a global benchmark for large, premium sedans, plunged 49 percent in October, and are down 24.8 percent for the year to date. General Motors Co\u2019s (GM.N) Cadillac brand said it sold just 779 of its CTS sedans in October. Demand for that car, designed to compete with German luxury sedans, is down nearly 33 percent for the year.<\/span><\/p>\n

Cadillac\u2019s best-selling model this year is the XT5 compact SUV, which has more than doubled sales from a year ago.<\/span><\/p>\n

The shift within the luxury vehicle market away from sedans toward SUVs of all sizes is forcing some of the most prestigious brands to scramble to add SUV models to their lineups or boost SUV production to meet demand.<\/span><\/p>\n

\u201cIn the short term, there will be pressure to add (consumer) incentives, cut production or both,\u201d said Cox Automotive analyst Michelle Krebs. \u201cAnd we just don\u2019t see an end in sight to this trend.\u201d<\/span><\/p>\n

The Dow Jones Industrial Average .DJI has been trading at all-time highs [.N], usually a good sign for luxury sedans, but as major automakers reported new U.S. vehicle sales for October on Wednesday, sales for passenger cars continued their slide while luxury SUV and crossover sales rose again.(tmsnrt.rs\/2inGn3Y)<\/span><\/p>\n

According to Kelley Blue Book data, in 2007 luxury sedans made up 7.6 percent of U.S. new vehicle sales, while luxury SUVs made up 4.2 percent. Through September this year, luxury SUVs made up just over 7 percent of the market, compared with 4.9 percent for luxury sedans.<\/span><\/p>\n

In the short term, luxury brands could use holiday season sales promotions to clear slow-selling sedans off dealer lots, analysts said. Toyota Motor Corp\u2019s (7203.T) Lexus brand said on Wednesday it will launch its \u201cDecember to Remember\u201d year-end sales promotion for the 18th straight year.<\/span><\/p>\n

HIGH-MARGIN VEHICLES<\/span><\/p>\n

Longer-term, luxury car makers have to restructure their model lineups, which have for decades reflected conventional thinking that the \u201cflagship\u201d of a luxury vehicle brand is a big sedan.<\/span><\/p>\n

Industry executives and analysts said luxury brands will launch more SUVs. BMW AG and Mercedes-Benz are both expanding their U.S. sport utility vehicle plants.<\/span><\/p>\n

Some luxury sedans will disappear from lineups, but not all. Lexus, for instance, is launching a redesigned version of its flagship LS sedan in the United States in 2018, starting at around $75,000.<\/span><\/p>\n

Established luxury car brands must reckon with the impact of Tesla Inc\u2019s (TSLA.O) electric vehicles, which have redefined the boundaries for advanced technology.<\/span><\/p>\n

Offering a little more horsepower is not enough to draw in many customers, said Scott Keogh, head of Audi\u2019s U.S. operations. \u201cThere really isn\u2019t a new stimulus\u201d for owners of current models to trade in their vehicles, he said.<\/span><\/p>\n

\u201cAudi buyers … want the latest and greatest,\u201d he said. That is one reason why the brand, owned by Volkswagen AG (VOWG_p.DE), plans to launch an electric sport utility in the United States by 2019.<\/span><\/p>\n

Sam Fiorani, vice president of AutoForecast Solutions, said automakers are keen to encourage eager consumers to buy luxury SUVs and crossovers as those models face less stringent fuel regulations and are far more profitable than sedans.<\/span><\/p>\n

\u201cThere\u2019s still a significant portion of the market that wants a car,\u201d Fiorani said, \u201cbut I\u2018m sure there were people who preferred a horse to a car at one point.\u201d<\/span><\/p>\n

Randy Parker, U.S. head of Nissan Motor Co Ltd\u2019s (7201.T) luxury Infiniti brand, said much depends on the U.S. economy and gasoline prices, but luxury brands \u201cwith a really robust SUV and crossover portfolio will … win in the next few years.\u201d<\/span><\/p>\n

As investment dollars shift to SUV models, poor performers among luxury sedans will \u201cfall by the wayside\u201d said Bill Rinna, senior manager for North American forecasts at consultancy LMC Automotive.<\/span><\/p>\n

\u201cAre some of your stalwarts going away?\u201d he said. \u201cI don\u2019t believe so.\u201d<\/span><\/p>\n

Source:http:\/\/www.reuters.com\/article\/us-autos-sales-luxury\/luxury-auto-brands-are-scrambling-to-avoid-a-blue-christmas-idUSKBN1D15QD<\/span><\/p>\n

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