US luxury car buyers are going for foreign brands, write Bernard Simonand John Reed
The US president still rides in a Cadillac, but more than three out of four Americans who buy a luxury car these days opt for a European or Japanese model.
Nowhere has the Detroit-based carmakers' loss of market share been more dramatic than in the luxury segment.
General Motors, Ford Motor and Chrysler sold fewer than half of all light vehicles in the US for the first time in July. But foreign brands captured 78.3 per cent of the luxury market. Their share rose further to 79.4 per cent in August, according to Autodata, a market research group.
What is more, the luxury segment is growing faster than most others and is expected to be relatively resilient in the face of the softening economy.
"We haven't seen anything [of a downturn] in the US so far, and don't expect anything in our business for the remainder of the year," Dieter Zetsche, chief executive of Daimler, said last week. Mercedes-Benz sales were near to flat in the year to August.
Lexus, Toyota's luxury brand and the market leader, reported a 5.2 per cent gain in sales in the first eight months of the year, compared with January-August 2006. BMW's sales were up 8.7 per cent, and Audi's 10.8 per cent.
Audi, Volkswagen's premium brand, last week said it had set a target of more than doubling US sales by 2015. It plans to retool its dealer network and develop a small sports-utility vehicle.
GM, Ford and Chrysler gave the foreigners an opening in the 1990s by focusing on SUVs and pick-up trucks. GM's Cadillac brand was outsold by Lexus, BMW and Mercedes-Benz in the first eight months of this year.
Ford neglected Lincoln, its domestic luxury brand, instead acquiring four European-based carmakers: Jaguar, Volvo, Land Rover and Aston Martin. Lincoln sales have also fallen behind Honda's Acura.
Cadillac gained a new lease of life in 2002 with a flurry of new models, notably the CTS saloon and the big Escalade SUV. But it has recently run out of steam, with sales down more than 10 per cent so far this year.
Demand for Cadillac's SRX crossover has been flat while rival Acura MDX is up by 13 per cent. The Lexus RX outsells the SRX four-to-one.
Cadillac is banking on a fresh boost from a new CTS. A hybrid Escalade will follow next year. Lincoln has also recently launched a flurry of new models.
But Tom Libby, director of vehicle analysis at consultancy JD Power, says Cadillac and Lincoln are not perceived as having the same quality as a Lexus.
One problem in Libby's view is that the two domestic brands do not have image-enhancing, top-of-the-line models to compete with BMW's 7-Series and Mercedes' S-Class. A Cadillac spokesman said it plans to fill that gap, but declined to elaborate.
But the foreigners are also not sitting still. Libby points to Mercedes' and BMW's success in extending their range of vehicles to derivatives such as sports models and SUVs.
At last week's Frankfurt Motor Show, BMW premiered the X6, a "sports activity coupé" that combines elements of an SUV and a sports car and is due to go on sale next year.
Lexus has expanded the luxury image to its dealerships. One $75 million (€53 million)outlet that opened in Newport Beach, California, last year includes marble floors, a grand piano, a games room and a café.