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Luxury automakers smash August sales records in Canada

 

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By Nicolas Van Praet, Financial PostSeptember 6, 2009

 

When auto executives gathered at Pebble Beach in Carmel, Calif. this month to show off a bevy of new luxury car models, the mood was decidedly more downbeat than in previous years.

 

Managers for Lamborghini and Lincoln decried the state of sales for their high-end cars, arguing that their well-heeled American buyers are fearful of flaunting their money with lavish purchases at a time when the United States is still gripped in financial scandals and climbing unemployment. “Keeping up with the Joneses is passé,” lamented Ford Motor Co.’s Mark Fields.

 

Somebody forgot to tell that to Canadians.

 

Amid the worst job market in 15 years, several luxury automakers smashed August sales records in Canada. Mercedes-Benz reported a 20% increase in sales and has sold 2,318 more vehicles this year than last. BMW and Lexus are also besting last year’s tally with double-digit percentage increases last month. Audi nearly doubled its sales in August over a year ago, and has sold 27% more vehicles this year.

 

The country is in a recession and yet the luxury market is holding up. Meanwhile, sales of the most affordable vehicles, subcompacts, are down 26% through the first eight months.

 

“It’s totally counter-intuitive,” said John White, chief executive of Volkswagen Group Canada, Inc., which comprises the Volkswagen and Audi brands.

 

“It’s taken us a little bit by surprise. And the Audi division has had to turn around and ask [headquarters] for more cars because we didn’t think the demand would be as strong in a down market.”

 

Mr. White’s read on the situation is that Canadians who believe they are secure in their jobs are pulling the trigger on buying middle-of-the-road luxury vehicles like the A4 sedan and BMW 3-Series, not the higher-end models. He said the luxury segment has become hyper-competitive as BMW and Mercedes “are out there as aggressive as you’ll see mainstream competitors,” offering deals that were unthinkable only a few years ago and making it easier for buyers to step into premium cars.

 

Mercedes is offering lease deals such as $398 per month on its 2010 C250 car, based on an interest rate of 4.9% for 36 months. That’s on par with a similarly-equipped Honda Accord or Mazda6, according to the Automobile Protection Association.

 

Roughly 40% of luxury vehicle sales transactions in Canada are leases, according to J.D. Power & Associates’ Power Information Network. One third of people pay cash while the rest take out a loan.

 

Sales growth is particularly strong in one sub-segment of the premium market: compact luxury SUVs. Volvo, Mercedes and Audi have launched new vehicles into that category this year, which has helped boost sales volumes 66% over 2008 levels, said industry analyst Dennis DesRosiers.

 

“We’re still a society that needs to carry stuff,” said J.D. Power analyst Geoff Helby in explaining why SUV models like the Volvo XC60 and Audi Q5 are clicking with buyers. “[People] are stepping away from the previous generation of minivans and big honking SUVs and they’re going into something smaller” without giving up luxury features.

 

In the mind of the Canadian luxury buyer, downsizing is the compromise they’re making in the recession, Mr. Helby said.

 

Mary Weil is proof. The media relations professional and her husband started looking around for a new vehicle earlier this year after the lease on a larger sports utility vehicle he drove expired, she recalls. They decided on a Mercedes GLK compact SUV.

 

“The price point was surprisingly not that much higher than comparable vehicles.”

 

In a Jan.15 analysis, Mr. DesRosiers predicted the luxury market in Canada overall will drop 5% this year. Automakers sold 131,436 luxury vehicles in 2008, a 3% decline over the year before.

 

Financial Post

 

nvanpraet@nationalpost.com

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Les ventes de ses autos sont surtout dans les modèles "entrée de gamme"

 

BMW Série 3, Mercedes Classe C, Audi A3 et A4, Lexus Is250, Acura TSX. Ce sont des véhicules de prestige mais avec des prix assez raisonnables!

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Les ventes de ses autos sont surtout dans les modèles "entrée de gamme"

 

BMW Série 3, Mercedes Classe C, Audi A3 et A4, Lexus Is250, Acura TSX. Ce sont des véhicules de prestige mais avec des prix assez raisonnables!

 

They cost a few dollars more per month than say a loaded mazda6 or honda accord...It's a no brainer to buy from luxury brand instead!

 

I'm sure most of those bmw's are base 323's :silly:

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They cost a few dollars more per month than say a loaded mazda6 or honda accord...It's a no brainer to buy from luxury brand instead!

 

I'm sure most of those bmw's are base 323's :silly:

 

Yup, Along with shitloads of Merc B and C class, A3's and A4's!

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Yup, Along with shitloads of Merc B and C class, A3's and A4's!

 

What's surprising, is that the "lowest" models of all the german brands are far from being their best seller, Audi's number for August in Canada

 

A3 82

A4/Avant 361

 

Same goes for BMW and Mercedes.

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