The Crossover Craze Is Actually Becoming a Problem for Luxury Brands
Luxury crossovers are selling like crazy, but there’s a big downside for the brands that sell them.
Bloomberg reports that luxury car companies are facing a unique challenge in the massive growth in popularity of crossovers in recent years. The fact that luxury sedans are slowing down in sales isn’t a big surprise and these companies know how to make adjustments to accommodate the shift in sales for new models, but what about used inventories?
Here’s the problem. The cars that are now coming off lease are cars that were popular a few years ago. This means a lot more sedans and coupes than what’s selling right now. The amount of sedans luxury car dealers are getting back from lease deals are disproportionate to the demand for gently used luxury sedans.
“It’s not necessarily the overwhelming amount of vehicles, it’s the mix of those flood of vehicles,” Scott Keogh, president of Audi of America, told Bloomberg. “You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs.”
Part of the problem is just how fast crossovers caught on over the past three years. According to data from Edmunds, crossovers and SUVs make for about 56 percent of luxury sales and that number was 42 percent just three years ago. Because of that market shift, luxury dealers are selling tons of crossovers, but they’re having a hard time getting used sedans off their lots.
Eventually, these inventories will balance themselves out, but until they do, expect to see a lot of used sedans at low, low prices at your local luxury car dealers. The good news for the buyer is that you can get a great deal on a gently used luxury sedan like a Cadillac CTS or Mercedes-Benz E-Class thanks to America’s insatiable appetite for crossovers.
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