Strong luxury brands are a hedge against tough times
While cumulative new-vehicle sales in Canada are up marginally in 2011 from year-ago figures, the month-to-month volatility in the market is enough to get a dealer hooked on Maalox. But there is another antidote for the ulcers resulting from that instability: get a luxury-car franchise.
In spite of the chaotic market conditions of the past three years, luxury-vehicle sales have remained strong. While their total numbers dipped slightly in the 2007-2009 period, they have otherwise been on a steady increase since 2000. And both sales and market share hit a ten-year high in 2010.
In addition, primarily-luxury brands averaged 512 sales-per-dealer in 2010, compared to 462 for full-line brands.
Total sales of 146,618 luxury vehicles last year were up 68.4 per cent from 2000, when just 87,072 were sold. And their market share increased from 5.6 per cent to 9.4 percent over the same period.
From 2005 to 2010, luxury sales increased by 9.9 per cent in an overall market that was down by 1.7 per cent.
Top performers
The biggest winners among luxury brands, in terms of total sales, have been BMW and Mercedes-Benz. BMW’s annual sales increased by 16,180 units (+ 146.8%) over the course of the decade. At the same time, Mercedes-Benz’s sales increased by 15,605 vehicles (+125.3%). While the Stuttgart brand was the luxury sales leader
in 2000, BMW claimed the top spot from
2001 through 2010, before relinquishing it
to Mercedes-Benz again in 2010.
On a percentage basis, Lexus (+172.0%) showed the greatest growth of all luxury brands during the decade, followed by Range Rover (+150.9%).
Along with Mercedes-Benz, the hottest brand over the past five years has been Audi, with annual sales increases averaging 25.0 per cent. It ranked ninth in sales among luxury brands in 2005 and fourth in 2010. And over the first five months of 2011, it has surpassed Acura to claim third place.
Not all luxury brands have fared as well, however. Hummer and Saab completely disappeared from the market, although Saab is struggling to make a reappearance. Among the 14 current luxury brands, Chrysler (-24.0 %), Jaguar (-67.5%) and Volvo (-33.1%) showed sales declines over the ten-year period. Over the past five years, their sales dropped by 78.4, 37.1 and 50.3 percent, respectively, and they were joined on the downside by Cadillac (-13.2%) during that period.
2011 performance
Overall sales of luxury brands remained solid through the first five months of 2011. Cumulatively, they were up by 2.3 per cent from the same period in 2010 in a market that was up just 1.8 percent.
That modest advance would undoubtedly have been stronger but for the performance of Japanese brands, which were suffering from supply constraints resulting from the earthquake and tsunami disaster in that nation. Combined year-to-date sales for Acura (-19.5%), Infiniti (-15.3%) and Lexus (-6.0%) were down by 13.5 percent.
Combined sales for non-Japanese luxury brands, however, were up by 10.0 per cent, suggesting that the luxury market as a whole remains strong, and well head of the market as a whole.
As was the case in 2010, Mercedes-Benz is leading BMW for first place among luxury brands. Audi is now in third place, followed by Lexus and Acura.
Segmentation
While the overall luxury market is performing well, there is some realignment occurring among the six luxury segments.
Overall market share and per cent change for each of the luxury segments for calendar year 2010 and year-to-date through the first third of 2011* are shown in the accompanying table.
The greatest growth in 2010 came from the Large Luxury SUV (+50.7%), Compact Luxury SUV (+20.5%), and Luxury High car (+18.8%) segments, followed by Intermediate Luxury SUV (+14.6%) and Luxury car (+5.3%).
All those except Luxury car (-7.6%) are continuing to advance in 2011, with Compact Luxury SUV (=16.6%) and Luxury High car (+10.6%) leading the way.
Luxury Sport was the only luxury segment to see sales decline in 2010, from 2009, and they are continuing to fall in 2011, down 22.6% in the first four months from a year earlier.
