Top luxury brands in the US spice up rivalry with large incentives

Article by Anita Panait, on June 19, 2012

Consumers in the United States have much reason to rejoice this year as leading luxury car and sport utility vehicle manufacturers offer steeper incentives and roll out new models, spurred by their bid to be the world’s topseller.  According to researcher Autodata Corp., Toyota Motor Corp.'s luxury unit Lexus hiked discounts on its cars by 54 percent and its SUVs by 60 percent this year. Lexus is followed by Mercedes-Benz, which boosted incentives by 11 percent and BMW AG by 6.9 percent. The three brands’ incentive increase is much greater than the industry’s measly 2.2 percent hike. Tom Libby, the lead North American analyst for R.L. Polk & Co., remarked that the figures could place an incredible pressure on pricing and could prompt incentive wars. BMW is trying to defend its crown as the best-selling luxury car maker in the U.S. from previous and long-time leader Lexus.

Current figures, meanwhile, show that Mercedes gained the upper hand for the first five months of 2012. Mercedes leads by almost 2,000 units and over 18,000 vehicles over BMW and Lexus respectively. The top three brands in the US are selling faster than the entire U.S. light vehicle industry could. Lexus, meanwhile, is not so positive about regaining the crown that it held for 11 years.

Mark Templin, U.S. Lexus chief, said the brand has a little chance of winning the U.S. sales race. Right now, the brand’s goal is to sell 250,000 units in the U.S. sales in 2012, around a percent more than BMW's 2011 results. In February, senior managing officer for Lexus, Kazuo Ohara, remarked that regaining the sales title would be a goal "if possible."

According to Templin, Lexus is spending more this year, since the brand does not have anything to sell in 2011. Templin added that there might not be a big increase in incentives in 2013. He said that Lexus will offer smaller incentives throughout 2012, as new versions of the brand’s most popular models reach dealerships. Templin took note of the Lexus’ ES and RX models, which had their incentives raised due to the fact that they are in sell-down mode.

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