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BMW or Mercedes-Benz Might Actually Topple Luxury-Car King Lexus

By Jim Henry

Updated on: December 17, 2010 / 1:35 PM EST / MoneyWatch

Luxury-car bragging rights are a funny thing: every luxury-car company wants to be No. 1 in sales, but nobody wants to be too obvious about wanting those bragging rights, for fear of cheapening the image of prestigious brands like Mercedes-Benz (DDAIF.PK), Lexus (TM) and BMW (BAMXY.PK).

That fear is well-founded. Pursuing a sales title means literally cheapening the brand with big December discounts, not just some metaphorical exercise. December has become "the" month to buy or lease a luxury car, because of sales promotions like Lexus December to Remember, with cars wearing a big red bow. Besides the effect on brand image, there's the literal cost of incentives, arriving at the tail end of the year, when budgets are depleted.

This discussion is especially timely in 2010, because for the first time in recent memory, Mercedes-Benz and BMW are within a few thousand units of unseating Lexus as the U.S. luxury-car champion. The last couple of years it hasn't been especially close, but Lexus and Toyota have both had a rough year, what with the unintended acceleration disaster for Toyota and an unusual recall for Lexus.

Bragging rights for the the best sales numbers of the year are important for the individual brands because the United States is still the biggest luxury-car market. Other global markets are catching up -- especially China. But luxury-car sales in Southern California alone outstrip most other countries. Even though the car companies themselves are usually circumspect about actually bragging in public about bragging rights, their dealers don't hesitate to crow about the "best-selling" this or that.

Who's No. 1 in the No. 1 market?

Right now, Mercedes-Benz is No, 1, based on 11 months of sales. Mercedes-Benz hasn't been No. 1 in the United States since 2000.
No. 2 Lexus is also very much in the running. Lexus has been No. 1 in U.S. luxury-car sales most years since its debut in 1989. The parent Toyota brand walked into a marketing buzz saw this year, in the form of recalls and the unintended acceleration disaster. Toyota sales are virtually flat this year, which itself is an achievement. But the Lexus brand still has something to play for.
No. 3 BMW made a race out of it for 2010, by putting on a sales spurt in recent months. That's mostly thanks to a new generation of its mid-range 5-Series. For instance, BMW's U.S. sales were up about 20 percent in November vs. the same month a year ago, topping both Mercedes-Benz and Lexus for the month.

Year to date through November, the tale of the tape looks like this, rounded up to the nearest thousand: Mercedes-Benz at 203,000; Lexus at 202,000; BMW at 197,000, according to AutoData. Even those numbers are a matter of dispute. It depends whether you include a few thousand units of the Sprinter van, which is sold by both Mercedes-Benz dealers and also Freightliner heavy-truck dealers. AutoData includes the vans. Some other sources don't.

In a recent press appearance, Ernst Lieb, president and CEO of Mercedes-Benz USA, said his company would be content to finish at "No. 3." That's not counting the vans. That's also another way of saying Mercedes-Benz is choosing not to practically give cars away at the end of the year, to hit a particular number. But would Mercedes-Benz quietly rejoice if it's No. 1, including the Sprinter vans? You better believe it.

All three brands have year-end sales promotions in full swing, with lots of advertising and sweet deals to match. If bragging rights are still down to the wire in late December, the sweet deals could get even sweeter.

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Photo: BMW