Thursday, 27 August 2020 22:33

Luxury Vehicle Sales Expected to Rebound from Depression

Written by Kimberly Hurley, CBT News


The coronavirus pandemic has not been beneficial to most industries, and this definitely includes the auto industry.

According to Cox Automotive, the Kelley Blue Book Brand Watch™ reported that for Q2 2020, luxury vehicle sales dropped 35% and hit their lowest level in the past two years.


The past couple of years had already seen a decline in luxury sales, with just 34% of consumers considering one, down from 39% in Q3 2018. There are various reasons for this, but for starters, lower-priced non-luxury vehicles are starting to be manufactured with technology previously only featured in luxury vehicles.


But the news isn’t grim. Luxury vehicle sales are expected to recover as the circumstances that caused the drop dissipate. 


One reason luxury brands were highly affected by the pandemic, according to Cox Automotive, is that New York City and Los Angeles are the two highest luxury markets in the country. Seeing as those cities have been plagued by coronavirus for months, it is no surprise demand sharply decreased and sales dropped.


The good news is as these areas recover in terms of economy and health, sales should too. Dealerships will be open for business, and healthy consumers who are open to shopping again will begin to do so.


Inventory levels have also been a struggle for luxury manufacturers due to the massive halt in supply chains that shut down factories for weeks or even months. As you might expect, the best-selling luxury vehicles are currently at the lowest inventory counts.

Japanese and German automakers have lagged behind the most, including Mercedes Benz and BMW. This is expected to get a lot better now that factories are back up and running, albeit with a lot more social distancing and sanitary measures implemented since they reopened.


It’s been quite understandable consumers have been putting off car buying due to other needs during the pandemic. Consumers are facing an unfortunately high unemployment rate, as well as increased financial anxiety and budgetary restrictions, which is impacting car sales all across the board. However, while concerns will remain for quite some time, it doesn’t all look terrible. 


Congress is working out another stimulus package, and Americans may see some additional cash in their accounts soon that undoubtedly could push some consumers who are on the luxury/non-luxury fence to splurge for a luxury vehicle.


The job market is expected to bounce back as the pandemic tapers off, meaning people will get back to having a regular, reliable paycheck and extra cash in their pockets. Consumers may then start reconsidering more expensive vehicles as opposed to basic, cost-effective, non-luxury ones.


Cox Automotive made sure to include that BMW continues to take the gold medal as the top luxury brand, continuing the trend since Q3 2018, with Audi and Lexus closely behind.


Luxury SUVs are still at the forefront of shoppers’ minds, with 62% of people looking for an SUV as opposed to a sedan. As the market recovers and consumers have more money for spending, the hope is that demand will increase for luxury vehicles of all makes and models, which will make sales bounce back to pre-COVID levels and beyond.


We thank CBT News for reprint permission.

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