BMW threatens to overtake Lexus as top-selling luxury brand in US

Southfield, Michigan: Bayerische Motoren Werke AG (BMW), buoyed by a new line of small cars, threatens to end the eight-year reign of Toyota Motor Corp.'s Lexus as the No. 1 US luxury brand.

The German automaker's namesake brand topped Lexus in July for the third time in 2008. BMW, the world's largest maker of luxury cars, trails Lexus by 3,466 sales after 7 months, erasing 90 per cent of the gap from the start of the year.

The US debut of the 1-Series car in March bolstered BMW's offerings with a model that gets 28 miles per gallon on the highway, blunting the effect of record gasoline prices that are sapping sales of big sport-utility vehicles. Lexus has added only a sports car and an SUV with 400 horsepower, V-8 engines.

Better shape

"Looking at BMW's lineup with all the gas issues of the day, they may be in better shape than Lexus," said Stephanie Brinley, a product researcher with AutoPacific Inc. in Southfield, Michigan. She said Munich-based BMW may pass Lexus by the end of the year.

A 40 per cent jump in global demand for the 1-Series helped boost last month's worldwide deliveries by 2.2 per cent, BMW said yesterday.

The 1-Series generated 7,400 US sales through July that the Munich-based automaker didn't have a year earlier. BMW also is benefiting from a 32 per cent rise in US sales of the Mini compact.

Lexus this year has introduced a redesigned version of its biggest SUV, the $74,000 LX 570, powered by a 383-horsepower V-8 engine, and the $56,000, 416-horsepower, IS F sports sedan. The brand is suffering its biggest decline since Toyota City, Japan- based Toyota unveiled it in 1989.

A BMW title isn't assured. The company is scaling back on leasing programs after being forced to take writedowns on returned leased vehicles. Residual values, the projected worth of a vehicle at the end of a lease, are dropping industrywide because of waning demand for pickups and SUVs.

BMW also is struggling with the weakest industrywide demand for new autos in 16 years. The company said Aug. 1 it will ensure profitability by reducing the number of vehicles produced for the US market this year by 40,000.

Still, BMW's 8 per cent US sales decline in 2008 has been less severe than the industry's 11 per cent drop and Lexus's 15 per cent slide.