Lexus, BMW and Mercedes battle for sales crown
06-17-12, 11:50 PM
#1
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Lexus, BMW and Mercedes battle for sales crown
The below article from Automotive news is a good read, Lexus may offer more incentives, but it's interesting to note that Lexus offered the least amount of incentives among luxury brands, but kept the sales crown for 11 straight years, conclusion, reliability and quality are really the bottom line that will sell a car:
DETROIT -- U.S. consumers are getting better deals on luxury cars and SUVs this year as the top brands clear out old models and race to be No. 1 in sales.
Toyota Motor Corp.'s Lexus has led the rise in customer incentives. Lexus boosted discounts on its cars by 54 percent this year and its SUVs by 60 percent, according to researcher Autodata Corp.
Mercedes-Benz increased incentives 11 percent and BMW AG by 6.9 percent, compared with a 2.2 percent gain in industry-wide promotions.
"You have these three brands that are all very close to one another and that's going to put incredible pressure on pricing," said Tom Libby, lead North American analyst for R.L. Polk & Co. "That's going to cause incentive wars. "
Lexus was the top-selling luxury-auto brand in the United States for 11 years, until BMW took the crown last year.
Mercedes leads BMW by fewer than 2,000 vehicles through May and Lexus by more than 18,000.
All have increased deliveries faster than the total U.S. light-vehicle market's 13 percent gain.
Lexus sees little chance of winning the U.S. sales race this year, said Mark Templin, Toyota's U.S. Lexus chief.
The brand's goal is for 250,000 U.S. sales this year, less than 1 percent more than BMW's 2011 results. BMW sales are up 14 percent so far this year.
Regaining the sales title would be a goal "if possible," Kazuo Ohara, senior managing officer for Lexus, told reporters in February.
"Spending is up this year because last year we didn't have anything to sell," Templin said. "If you go a year from now, in terms of incentives, you won't see big growth."
Redesigned models
The brand will offer smaller incentives over the course of the year, he said, as new versions of its most popular models reach dealerships. "ES and RX have both been in sell-down mode, so there was some increase there," Templin said. "We had the buildout of 2012 RX, but the new RX just hit this month, and we added the new ES recently, so you'll see that change."
Lexus has historically spent the least in the industry on incentives, said Eric Lyman, vice president of residual value solutions at ALG Inc. in Santa Barbara, Calif.
ALG sees "significant compression" between companies that have historically been the most aggressive discounters, such as General Motors and Chrysler Group, and those that have been thriftier, such as Toyota, Honda Motor Co. and the German luxury brands, including Volkswagen AG's Audi.
Past 'discipline'
"Those brands that have had discipline in the past have started to increase their spending," said Lyman, whose company publishes a benchmark guidebook used by the industry to set residual values, or projected resale values that determine buyers' monthly lease payments.
Residual values are particularly important for the luxury market because leasing accounts for as much as half of sales transactions, Polk's Libby said.
Discounts baked into lease contracts aren't as expensive as they may appear, said Jesse Toprak, an industry analyst with TrueCar.com.
"It's not money out-of-pocket today," he said. Mercedes sales for this year through May increased 18 percent to 106,364, while BMW gained 14 percent to 104,779 and Lexus rose 14 percent to 88,110.
The results exclude Daimler's Sprinter vans and Smart cars and BMW's Mini brand, which aren't luxury vehicles.
Lexus line
Lexus spent $3,734 on incentives per SUV sold in May and $2,855 per car, according to Woodcliff Lake, N.J.-based Autodata Corp. The average vehicle last month sold with $2,545 in discounts, up 11 percent from a year earlier, Autodata said.
The brand has been coaxed into using discounts as models such as the RX SUV, its only North America-built vehicle, get older and rivals roll out competing vehicles, ALG's Lyman said.
Mercedes started selling a refreshed M-Class last year. GM's Cadillac SRX and even mainstream brands such as Chrysler Group LLC's Jeep, which offers versions of its Grand Cherokee SUVs that can sell for more than $50,000, are challengers to the RX.
"Lexus is at the tail end of their life cycle for a lot of their volume products, and the competitive landscape has changed," Lyman said.
Daimler boosted incentive spending by 28 percent in May to $3,990 per Mercedes car, and by 23 percent to $3,473 per SUV, according to Autodata.
Mercedes models
The Mercedes E-Class has consistently been the most heavily incentivized model in the mid-size luxury segment and S-Class promotions "continue to trend upwards, Stuart Pearson, a London-based analyst at Morgan Stanley, wrote in a June 6 research note.
That's to be expected from a model at the end of its run, said Steve Cannon, head of Mercedes U.S. sales, noting that a new S-Class will go on sale next year.
"Your flagship when it's at the end of its life cycle struggles, but that's not particular to us," he said. "It's the same for any of our key competitors."
The flip side is the opportunity to cut discounts on popular redesigned models. "The best success this store is having is based on new- product releases, such as the new 3-Series," said Jeff Gerken, general manager of BMW South County near San Diego. "It is not being incentivized, but yet it's selling very well."
BMW discounts
Total U.S. incentive spending for Munich-based BMW, including its Mini brand, climbed 4.1 percent in May to $3,613 per vehicle, as promotions on cars increased 10 percent to $4,218.
The company pared discounts on SUVs by 9.4 percent from a year earlier to an average of $2,286. BMW has approached its incentive strategy "scientifically and strategically," Gerken said.
So-called loyalty offers that give current BMW owners $1,500 to $2,000 rebates have "done a lot to help us sell cars," he said.
"They're not just putting thousands of dollars in the trunks," Gerken said. "You almost need your ouija board to put a car deal together today. They're pulling all the strings that they possibly can."
BMW and Mercedes are also in a global luxury race with VW's Audi brand. Its U.S. sales this year through May rose 14 percent to 52,494, topping GM's Cadillac, as the premium unit of Wolfsburg, Germany-based VW has set sales records for 17 consecutive months.
Audi's increase
Audi increased incentives on cars by 18 percent to $3,553 per car and by 23 percent to $2,261 per SUV in May, according to Autodata.
Audi aims to increase U.S. sales to 200,000 vehicles annually by 2018 from 117,561 last year.
Incentives in the luxury market have been "targeted" and "fairly modest," said Greg Goodwin, CEO of Kuni Automotive which operates 14 premium-brand dealerships in California, Oregon, Colorado and Washington.
Loyalty deals often involve customers trading their previous car in for a new one, which is helping rebuild used-car supplies that have been crimped by slow sales during the recession, he said.
"I expect that we will see incentives continue for the foreseeable future, but I also expect that they'll be more effective and more impactful," said Goodwin, whose company in Vancouver, Washington, operates BMW, Lexus and Audi stores.
Momentum from new-product introductions should "enable manufacturers to continue to manage incentives more carefully and cautiously than they have in past years."
http://www.autonews.com/apps/pbcs.dl...or-sales-crown
Read more: http://www.autonews.com/article/2012...#ixzz1y7m58t9j
DETROIT -- U.S. consumers are getting better deals on luxury cars and SUVs this year as the top brands clear out old models and race to be No. 1 in sales.
Toyota Motor Corp.'s Lexus has led the rise in customer incentives. Lexus boosted discounts on its cars by 54 percent this year and its SUVs by 60 percent, according to researcher Autodata Corp.
Mercedes-Benz increased incentives 11 percent and BMW AG by 6.9 percent, compared with a 2.2 percent gain in industry-wide promotions.
"You have these three brands that are all very close to one another and that's going to put incredible pressure on pricing," said Tom Libby, lead North American analyst for R.L. Polk & Co. "That's going to cause incentive wars. "
Lexus was the top-selling luxury-auto brand in the United States for 11 years, until BMW took the crown last year.
Mercedes leads BMW by fewer than 2,000 vehicles through May and Lexus by more than 18,000.
All have increased deliveries faster than the total U.S. light-vehicle market's 13 percent gain.
Lexus sees little chance of winning the U.S. sales race this year, said Mark Templin, Toyota's U.S. Lexus chief.
The brand's goal is for 250,000 U.S. sales this year, less than 1 percent more than BMW's 2011 results. BMW sales are up 14 percent so far this year.
Regaining the sales title would be a goal "if possible," Kazuo Ohara, senior managing officer for Lexus, told reporters in February.
"Spending is up this year because last year we didn't have anything to sell," Templin said. "If you go a year from now, in terms of incentives, you won't see big growth."
Redesigned models
The brand will offer smaller incentives over the course of the year, he said, as new versions of its most popular models reach dealerships. "ES and RX have both been in sell-down mode, so there was some increase there," Templin said. "We had the buildout of 2012 RX, but the new RX just hit this month, and we added the new ES recently, so you'll see that change."
Lexus has historically spent the least in the industry on incentives, said Eric Lyman, vice president of residual value solutions at ALG Inc. in Santa Barbara, Calif.
ALG sees "significant compression" between companies that have historically been the most aggressive discounters, such as General Motors and Chrysler Group, and those that have been thriftier, such as Toyota, Honda Motor Co. and the German luxury brands, including Volkswagen AG's Audi.
Past 'discipline'
"Those brands that have had discipline in the past have started to increase their spending," said Lyman, whose company publishes a benchmark guidebook used by the industry to set residual values, or projected resale values that determine buyers' monthly lease payments.
Residual values are particularly important for the luxury market because leasing accounts for as much as half of sales transactions, Polk's Libby said.
Discounts baked into lease contracts aren't as expensive as they may appear, said Jesse Toprak, an industry analyst with TrueCar.com.
"It's not money out-of-pocket today," he said. Mercedes sales for this year through May increased 18 percent to 106,364, while BMW gained 14 percent to 104,779 and Lexus rose 14 percent to 88,110.
The results exclude Daimler's Sprinter vans and Smart cars and BMW's Mini brand, which aren't luxury vehicles.
Lexus line
Lexus spent $3,734 on incentives per SUV sold in May and $2,855 per car, according to Woodcliff Lake, N.J.-based Autodata Corp. The average vehicle last month sold with $2,545 in discounts, up 11 percent from a year earlier, Autodata said.
The brand has been coaxed into using discounts as models such as the RX SUV, its only North America-built vehicle, get older and rivals roll out competing vehicles, ALG's Lyman said.
Mercedes started selling a refreshed M-Class last year. GM's Cadillac SRX and even mainstream brands such as Chrysler Group LLC's Jeep, which offers versions of its Grand Cherokee SUVs that can sell for more than $50,000, are challengers to the RX.
"Lexus is at the tail end of their life cycle for a lot of their volume products, and the competitive landscape has changed," Lyman said.
Daimler boosted incentive spending by 28 percent in May to $3,990 per Mercedes car, and by 23 percent to $3,473 per SUV, according to Autodata.
Mercedes models
The Mercedes E-Class has consistently been the most heavily incentivized model in the mid-size luxury segment and S-Class promotions "continue to trend upwards, Stuart Pearson, a London-based analyst at Morgan Stanley, wrote in a June 6 research note.
That's to be expected from a model at the end of its run, said Steve Cannon, head of Mercedes U.S. sales, noting that a new S-Class will go on sale next year.
"Your flagship when it's at the end of its life cycle struggles, but that's not particular to us," he said. "It's the same for any of our key competitors."
The flip side is the opportunity to cut discounts on popular redesigned models. "The best success this store is having is based on new- product releases, such as the new 3-Series," said Jeff Gerken, general manager of BMW South County near San Diego. "It is not being incentivized, but yet it's selling very well."
BMW discounts
Total U.S. incentive spending for Munich-based BMW, including its Mini brand, climbed 4.1 percent in May to $3,613 per vehicle, as promotions on cars increased 10 percent to $4,218.
The company pared discounts on SUVs by 9.4 percent from a year earlier to an average of $2,286. BMW has approached its incentive strategy "scientifically and strategically," Gerken said.
So-called loyalty offers that give current BMW owners $1,500 to $2,000 rebates have "done a lot to help us sell cars," he said.
"They're not just putting thousands of dollars in the trunks," Gerken said. "You almost need your ouija board to put a car deal together today. They're pulling all the strings that they possibly can."
BMW and Mercedes are also in a global luxury race with VW's Audi brand. Its U.S. sales this year through May rose 14 percent to 52,494, topping GM's Cadillac, as the premium unit of Wolfsburg, Germany-based VW has set sales records for 17 consecutive months.
Audi's increase
Audi increased incentives on cars by 18 percent to $3,553 per car and by 23 percent to $2,261 per SUV in May, according to Autodata.
Audi aims to increase U.S. sales to 200,000 vehicles annually by 2018 from 117,561 last year.
Incentives in the luxury market have been "targeted" and "fairly modest," said Greg Goodwin, CEO of Kuni Automotive which operates 14 premium-brand dealerships in California, Oregon, Colorado and Washington.
Loyalty deals often involve customers trading their previous car in for a new one, which is helping rebuild used-car supplies that have been crimped by slow sales during the recession, he said.
"I expect that we will see incentives continue for the foreseeable future, but I also expect that they'll be more effective and more impactful," said Goodwin, whose company in Vancouver, Washington, operates BMW, Lexus and Audi stores.
Momentum from new-product introductions should "enable manufacturers to continue to manage incentives more carefully and cautiously than they have in past years."
http://www.autonews.com/apps/pbcs.dl...or-sales-crown
Read more: http://www.autonews.com/article/2012...#ixzz1y7m58t9j
06-18-12, 07:15 AM
#2
They are being modest with their sales goals, in my opinion. With the release of the new ES, I think year-end #1 is not quite as far from their reach as Lexus thinks (or says). They just really need to advertise the hell out of the ES launch, as well as return the new GS and RX back into the minds of shoppers with the goal of sustained sales.
06-18-12, 09:06 AM
#3
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And again its bigger than incentives, perception is changing. Note how the article mentions Benz, BMW, Lexus and Audi now. Audi rarely got mentioned in articles in the past. The balance of power has now completely shifted to the Germans with Lexus the sole major player from Japan.
I stated it before I don't expect Lexus to be top in sales for a few years unless something abnormal happens to the Germans. They are too good and too smart to not want to keep that #1 spot in America and will surely do whatever it takes to keep it.
Lexus has to seriously bring out some HOT HOT HOT and sexy products to win back customers. The good news is they are coming
I wonder if these changed much?
I stated it before I don't expect Lexus to be top in sales for a few years unless something abnormal happens to the Germans. They are too good and too smart to not want to keep that #1 spot in America and will surely do whatever it takes to keep it.
Lexus has to seriously bring out some HOT HOT HOT and sexy products to win back customers. The good news is they are coming
I wonder if these changed much?
Last edited by LexFather; 06-18-12 at 09:13 AM.
06-18-12, 09:13 AM
#4
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Doing paperwork today for my wife's new turbodiesel X5 that we're ordering.
$4500 Eco Credit (diesels only) + $1500 Owner Loyalty Credit + $1000 BMW Team USA Drive Credit = $7000 in incentives.
Quality and reliability is definitely a selling point for Lexus, but they get heavily outsold in I think almost all other luxury segments besides the mid-sized SUVs (the RX). I think the RX single-handedly floats Lexus. Lots of other things, though. Curb appeal, styling, colors, brand cachet, technology, drive/ride/handling/performance, etc. My wife is still driving her 2002 Toyota Highlander from 10 years ago so she'd be a natural candidate for an RX350 or 450h. Wanna know the biggest reason she didn't even want to test drive the RX? Didn't like any of the colors, whereas there were multiple ones she liked on the BMWs. That and she thought the styling was incredibly boring looking. Liked the 'new' styling on the 2013 that's coming out a lot better, but that still didn't resolve the color angle.
$4500 Eco Credit (diesels only) + $1500 Owner Loyalty Credit + $1000 BMW Team USA Drive Credit = $7000 in incentives.
Originally Posted by LexPaul
The below article from Automotive news is a good read, Lexus may offer more incentives, but it's interesting to note that Lexus offered the least amount of incentives among luxury brands, but kept the sales crown for 11 straight years, conclusion, reliability and quality are really the bottom line that will sell a car:
06-18-12, 12:41 PM
#6
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06-18-12, 12:42 PM
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speaking of cadillac, where do they sit in all of this?
LOVING the commercials for the new xts. looks GREAT.
LOVING the commercials for the new xts. looks GREAT.
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06-18-12, 12:43 PM
#8
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08-21-12, 06:59 AM
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From what I read of the new ATS, it's directly aimed at the 328 and C class. Until lexus redoes teh IS, they are vulnerable IMHO. Unlike teh Germans, cadillac doesn't nickle and dime you on options, offering fairly comprehensive trim levels. For what i paid for my IS in 2008, I can get a well equipped ATS today that's a full second faster to 60mph, and that's not even the top model!
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