Luxury vehicle demand grew faster in July 2014 than overall car sales

Article by Andrew Christian, on August 7, 2014

Luxury vehicles accounted for nearly 16 percent of the United States auto industry despite representing only 10.8 percent of the overall market in the country. It shows how demand for luxury vehicles has been rising while sales growth of volume units is stagnating.

This could be attributed to the fact that luxury carmakers took the challenge of fielding entry-level nameplates and offering appealing leases while wealthy consumers have are seeing their stock portfolios surge.

In fact, sales of luxury cars – excluding sporty and exotic cars – jumped 6 percent from January to July 2014, while overall car sales just surged 1 percent. In July, overall US sales leaped 9 percent, but most luxury brands gained double digits.

For example, Lexus jumped 19 percent. On the other hand Mercedes-Benz and BMW logged growths of 15 percent and 10 percent, respectively. But not all luxury brands were able to post growth, as Cadillac and Acura saw their sales slump.

The seasonally adjusted annualized rate of sales was 16.5 million in July. Luxury brands are expected to deliver over 1.8 million units this year, may even breach surpass the all-time high of 1.83 million recorded in 2007.

Sales of luxury sales were particularly helped by and contributed to record-high lease rates. According to Experian Automotive, around 30.2 percent of financed new vehicles were leased, in the first quarter of 2014 compared to 24.4 percent just two years ago.

Analysts estimate that between 50 percent and 60 percent of luxury vehicles are leased, creates a steady flow of returning customers while allowing those newly able to have the means to acquire an upscale brand.

Dealerships have also been getting customers coming off three-year leases as well as customers now ready for their third two-year lease since recession. [source: automotive news - sub. required]

Topics: sales

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