Could luxury brands be overselling themselves?

Sales at the German luxury automakers have skyrocketed, with BMW, Audi, and Mercedes-Benz all selling above the 420,000-vehicle level the past two quarters, worldwide. Those three makes altogether were up nine percent just versus year-ago levels.

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Last year in the U.S. alone Mercedes-Benz sold 356,000 vehicles, with BMW at 340,000 and Audi at 182,000. Vehicles with these badges are hardly the coveted, rare items that they were in the not-so-distant past.

And exclusivity is a big part of the appeal of a luxury make.

What's 'popular' can backfire in luxury

As a market analyst told Bloomberg, best-selling status isn’t necessarily a good thing in the luxury category. “They don’t want to be one of many; they want to be one of few,” said Boston Consulting Group’s Lara Koslow.

Arguably, automakers are keeping their traditional flagship models, like the Audi A8, the BMW 7-Series, or Mercedes-Benz S-Class, just as exclusive, and instead they’re branching out to more bodystyles and variants. BMW’s dizzying array of Sports Wagon, ‘X,’ Gran Coupe, and Gran Turismo models is a good example of that. With many more sub-models and variants, luxury automakers are having an easier time convincing buyers that they’re getting something special.

Although as other analysts point out, is that if just one of these new luxury-brand entry models don’t stand up on quality, there are diminishing returns for a luxury brand.

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Jaguar, Volvo, Infiniti poised to benefit?

The push from German luxury brands to ‘crank out’ more volume could work in favor of some brands that have seen their numbers down in recent years, though—particularly Jaguar, Volvo, and Infiniti, which are each working to dramatically revamp and broaden their model lines.

Lexus remains an outsider to this concern. Its sales levels passed the 300,000 annual level for several years a decade ago—and they’re back up there now—yet it hasn’t affected the resale value of models like its best-selling RX crossover.

Are you more likely to consider a luxury brand that remains rarer and more exclusive? Is the prestige of German brands intact, or does their ‘ubiquity’ turn you off? These are all questions that the market will soon answer, but please do leave your comments below


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