BMW threatens to overtake Lexus as top-selling luxury brand in US

Business Materials 10 August 2008 06:07 (UTC +04:00)

Bayerische Motoren Werke AG (BMW), buoyed by a new line of small cars, threatens to end the eight-year reign of Toyota Motor Corp's Lexus as the No. 1 US luxury brand. ( GN )

The German automaker's namesake brand topped Lexus in July for the third time in 2008. BMW, the world's largest maker of luxury cars, trails Lexus by 3,466 sales after 7 months, erasing 90 per cent of the gap from the start of the year.

The US debut of the 1-Series car in March bolstered BMW's offerings with a model that gets 28 miles per gallon on the highway, blunting the effect of record gasoline prices that are sapping sales of big sport-utility vehicles. Lexus has added only a sports car and an SUV with 400 horsepower, V-8 engines.

"Looking at BMW's lineup with all the gas issues of the day, they may be in better shape than Lexus," said Stephanie Brinley, a product researcher with AutoPacific Inc. in Southfield, Michigan. She said Munich-based BMW may pass Lexus by the end of the year.

A 40 per cent jump in global demand for the 1-Series helped boost last month's worldwide deliveries by 2.2 per cent, BMW said yesterday.

The 1-Series generated 7,400 US sales through July that the Munich-based automaker didn't have a year earlier. BMW also is benefiting from a 32 per cent rise in US sales of the Mini compact.

Lexus this year has introduced a redesigned version of its biggest SUV, the $74,000 LX 570, powered by a 383-horsepower V-8 engine, and the $56,000, 416-horsepower, IS F sports sedan. The brand is suffering its biggest decline since Toyota City, Japan- based Toyota unveiled it in 1989.

A BMW title isn't assured. The company is scaling back on leasing programs after being forced to take writedowns on returned leased vehicles. Residual values, the projected worth of a vehicle at the end of a lease, are dropping industrywide because of waning demand for pickups and SUVs.

BMW also is struggling with the weakest industrywide demand for new autos in 16 years. The company said Aug. 1 it will ensure profitability by reducing the number of vehicles produced for the US market this year by 40,000.

Still, BMW's 8 per cent US sales decline in 2008 has been less severe than the industry's 11 per cent drop and Lexus's 15 per cent slide.