US: Lexus and German brands have nothing to fear from less powerful competition image

Today called “second-tier” luxury brands, marquees such as Lincoln, Acura or Infiniti continuously struggle to snatch market share form the current leaders: BMW, Mercedes-Benz and Lexus.

The powerful trio has simply exchanged places among themselves over the course of the past 25 years, while local powerhouse Cadillac even lost its fourth place to another surging German brand – Audi. Even as the US auto market has been rapidly recovering from the last Great Recession, they continue to look from outside at the “rich table” represented by BMW, Mercedes and Lexus. That’s because last year, for example, the US luxury auto market – the largest in the world – rose by 6.4 percent (even faster than its mass-market counterpart) and most of the lion’s share was divided among four brands: BMW, Mercedes, Lexus and rapid rising Audi. The leading triumvirate has combined to account for more than 50 percent of all sales in the segment in 2014. But the stakes remain high even for the tier two brands – IHS Automotive predicts premium deliveries will make up 12.7 percent of the US market in 2016, rising from 11.4 percent last year.

The three leading brands have a combination of assets that secures their top position: wide product ranges, global positioning, great residual values and a brand image that aspiring competitors only dream at. Shopping data actually shows that customers of aspiring brands are the most likely to switch to one of the top three and Audi than the other way around. The situation carries since 1998 – for the entire period only BMW, Mercedes or Lexus has held the top position. For that year Lincoln might take a trip down memory lane, while Cadillac should feel ashamed with last year’s sales flop of one percent after being the undisputed leader since before 1970.

Via Automotive News