In 2015, Ford, Mustang, Mercedes-Benz C-Class, Lexus RX, Dodge Challenger, BMW 3 Series, and Chevrolet Camaro have hit the fast lane at full speed. Only a few months into the future, the same American muscle-car brands saw their sales splutter on the luxury car market. By August, entry-level high-end cars saw their sales tumble by a significant 19.6%.
However, 2016 appears to be a mixed bag for the auto industry. While growing economic malaise is affecting the luxury sector, not all cars are ailing.
The 2016 Luxury Car Market – The Race to Your Pocket
It’s usually the top-tier brands that bring in the substantial profits to automakers. Their profitability and margins are higher than the mass-market cars.
‘Customers who buy Mustangs, Camaros and Challengers do so because they want modern evocations of 1960s performance icons, not because they need them’, explain Karl Brauer, senior director of insights for a California-based car research company, Kelley Blue Book.
It’s only natural that negative sales figures hurt the industry’s profitability, drawing a big question mark in the process. Why do some luxury brands fare better than others? Where is the shift in the consumers’ choice of wheels?
American Top Favorite Wheels of 2016 – Luxury SUVs to Win the Race
For the same period that reported drops on the high-end spectrum of the car industry, Americans seemed to grow an appetite for luxury SUVs. In the category of mid-range four-wheel drives, sales raced ahead by 14.2% to nearly 26,000 units, while entry-level figures show an increase of 11.3% to more than 58,000 units.
The more discreet, cushy, quiet luxury models are slowly crowding the dealerships and factories. Meanwhile, the winners are the luxury brands who have decided to follow the leader trend and indulge the drivers’ need for bulky speed.
The Luxury Car Market – A More Challenging Business Environment
Cadillac, Jaguar, and Lexus are some famous examples. Once they have shifted to SUVs, they registered instant sales gains. Jaguar only recently embarked on the luxury car market of four-wheel drive models.
Gambling on the high-risk factors of a volatile market proved to be a lucky strike for the British brand’s first-ever SUV, the F-Pace. The sports utility vehicle debuted early summer with a starting price tag of $41,000. In no time at all, it became a favorite among SUV lovers. Another new Jaguar venture, the XE, a compact sedan, joined the sales hits and helped increase the brand’s sales by 73% year-to-date.
Ford Motor Company’s Lincoln didn’t lag far behind either. After all, only last year it took the podium of the top selling luxury vehicle brand in the US. Of its four SUVs they offer, the midsize MKX and compact MKC crossovers have ensured the Lincoln keeps the sales on the up-trajectory. Monthly figures optimistically highlight a 12% year-over-year demand for the brand’s SUVs.
Volvo is another triumphant example to upsetting the poor sales pattern on the luxury car market. The Swedish brand stated that the American consumer had been a blessing in disguise. The US market proved to be the fastest sales lane for its 2016 signature SUV, the XC90.
However, an overall downbeat year for the luxury car market might extend into a gloomier future. Even for the now-beloved European heavyweights. Increasingly higher vehicle loan interest rates and an expected overflow of cars into the used auto market are some of the factors to consider in future prognostics.