Mercedes Gains, Lincoln Lags Amid `Breathtaking' SUV Shift

(Bloomberg) -- It isn’t just mainstream American consumers shunning sedans for sport utility vehicles -- luxury buyers are also racing into showrooms for the latest crossovers.

Honda Motor Co.’s luxury Acura brand suffered a 35 percent drop in U.S. car sales last month, while Ford Motor Co.’s Lincoln car sales slid 30 percent. Luxury leaders BMW AG and Daimler AG’s Mercedes-Benz -- backed by stronger SUV lineups -- are handling the shift more comfortably: Mercedes’ GLC crossover helped it muster a small gain in April, while BMW sales rose 3.8 percent, buoyed by a 21 percent jump in deliveries of its X3 crossover.

Mercedes Gains, Lincoln Lags Amid `Breathtaking' SUV Shift

Evolving tastes and fierce competition have led Ford to plan its exit from the family car business, much like Fiat Chrysler Automobiles NV did earlier by ending production of its Dodge Dart and Chrysler 200 sedans. While no luxury brands have announced such a sweeping strategic move, the trends in the premium auto market are just as compelling.

“We continue to see the same shift, in fact more significant, from cars into SUVs in the premium segment,” Ford’s U.S. sales chief Mark LaNeve said on a call Tuesday with analysts and reporters. “It’s breathtaking really, the trend that we’re seeing.”

SUVs have jumped to 60 percent of the premium vehicle market, gaining 6 points since last year, LaNeve said.

“Certainly all the trends are holding up in luxury as well as in the broader mass market,” Charlie Chesbrough, senior economist for closely held Cox Automotive, said on a call with reporters.

The New Limo

A changing of the guard in limousines is contributing to the luxury market’s transformation. American presidents who were once ferried around in big Cadillac or Lincoln sedans are now whisked away in a phalanx of big SUVs. The same is true for business travelers who once rode to airports in Lincoln Town Cars, commonly known in the livery business as a black car.

“That limo or black car service from before should now be called the black SUV service,” said Mark Wakefield, head of the auto practice at consultant AlixPartners. “That helps form people’s expectations. This is the high-end transport now.”

Mercedes is outselling BMW by 8,364 vehicles through April, putting Daimler’s brand in position to hold onto its luxury lead for a third year. It snatched the crown from BMW in 2016 with a well-timed lineup of compact crossovers and SUVs. BMW is trying to claw its way back with its diminutive X2 crossover, and a full-size X7 coming at the end of 2018.

Volkswagen AG’s Audi reported a 2.1 percent gain in April, with the Q3 crossover leading increases across its SUV line. Toyota Motor Corp.’s Lexus was the only one among the top four luxury brands to see a drop last month -- sales slipped 2.1 percent, as deliveries of the ES sedan fell 5.4 percent and the entry-level IS dropped 16 percent.

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