Archive for February 15th, 2010
Are Luxury Car Sales In Deep Trouble?
February 15th, 2010 | 
Author: Are Luxury Car Sales In Deep Trouble?
Just as the auto industry struggles to remain afloat so do the segments it’s made up of. And luxury car sales are no exception. Since luxury automobiles are faced with a double whammy of being high priced and being gasguzzling are we to see their sales go from bad to worse?
Automobile and auto part sales have generally been affected negatively owing to high gas prices and economic downturn with auto stocks showing spikes only sporadically as crude prices lower a bit. Now when it comes to the sales of Luxury cars and trucks they’ve taken a hit of 11 yeartodate YTD while the auto sales throughout the US have been down by 18.
Based on the figures above it appears that luxury sales are much better than the rest of the industry and since they only account for for just about 10 of the industry’s sales they won’t have much of an impact. The margins however on all products within the segment are large and which is what makes it valuable.
At the same time given the shift from gasguzzling automobiles towards smaller ones it appears that no one would go for them but the recent announcement by the General Motors Corp of an SUV Cadillac Escalade Hybrid indicates that auto makers have different expectations. And it seems that they might be right because the highend products are directed towards a different target audience altogether. The target segment for luxury vehicles shouldn’t have problems with affordability per se including paying for high gas prices while the need to acquire highend products persists.
The factor aside from the gasguzzling ability that could affect the purchase of bigger automobiles is the perception that these vehicles are less environment friendly. Now while demand might exist whether the big autos sell well or not seems to depend on a lot more than their uniqueness. But auto makers seem to have an answer to even this conundrum by producing hybrids which have a better standing when it comes to ecofriendliness. The Cadillac Escalade hybrid seems to be proof enough and perhaps other car makers like Toyota or Ford would follow suit if the experiment goes off well.
On the whole some rough weather does loom large over the luxury car segment but given the efforts auto industry is ready to put in luxury sales could sail through the storm quite well.
About the writer: Fred is a journalist with 7 years of experience. Though as a professional he’s reported on myriad topics his favorites are the auto and the healthcare industry. Two of the platforms he’s previously worked on are Themedica and AutomotiveOnline. He now blogs at: Automobile Hotspot
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