Those shiny and expensive Lexuses and Lincolns on Columbia dealers’ lots are no longer immune from the demons that have driven the auto industry into the ditch.
“It has been hit hard,” said Chase Craven, general sales manager at Stivers Automotive Group, a Lincoln dealership. “It’s plain and simple, people are saying, ‘I’m not making any big purchases.’”
The reasons why the luxury-car business - once thought to be recession-proof - is down locally include a shaky economy plagued by high gas prices and tight credit.
“The stock market probably has more of an effect on luxury-car buyers than the price of gasoline,” said Jim Hudson, majority owner of Jim Hudson Automotive Group, which includes the Lexus dealership on Two Notch Road.
The Dow Jones Industrials, a key barometer of the New York Stock Exchange, is down about 13 percent for the year.
“I had one customer in here who was looking,” said Craven, of the Lincoln dealership on Greystone Boulevard. “Then his wife reminded him he was $75,000 down (in the market) this year.”
Because they can afford it and don’t have to replace a car, many buyers also are waiting to see what happens to the economy, Craven said.
Dealers surveyed said local sales closely mirror the national trend.
Nationally, sales of U.S. luxury brands Lincoln and Cadillac dropped this year 20 percent and 12 percent respectively. Japanese brands aren’t faring much better. Sales of Toyota’s Lexus, the leading luxury brand leader in the United States, are down 15 percent. The Honda-built Acura is off 14 percent.
The leading European brands BMW and Mercedes are hanging tough. BMW is down 3 percent while Mercedes is up 2 percent.
SUV sales appear to be an area of the luxury-car market that’s weathering the economic storm.
BMW reported that its new Greer-built X6 sports activity coupe, which was launched in the spring and has a base price of about $52,500, is sold out for the first model year.
There’s a six-month waiting list to buy Lexus’ largest SUV, the LX570, Hudson said. The vehicle’s base price is $74,700.
In this case, the price of gasoline obviously isn’t a deterrent for buyers. The EPA estimate for the LX570’s 5.7-liter, 383-horsepower engine is 12 miles per gallon in the city and 18 on the highway.
Aware that some luxury buyers want economy, too, Cadillac earlier this month launched the first Escalade hybrid.
With a base price of $71,685, the vehicle boasts an EPA rating of 20 mpg in the city and 21 on the highway. The non-hybrid version, which lists about $3,600 less, gets 12 mpg in the city and 18 on the highway.
While the new-car side of the house might be struggling, some dealers say sales of used cars backed by automakers’ certified pre-owned programs are up.
“We normally sell about eight certified pre-owned a month. But halfway through this month, we’ve sold 14,” said Gerald Sitton, general sales manager at McDaniels Acura-Porsche on Two Notch Road.
A certified pre-owned car typically is a late-model vehicle that has been inspected by the dealer’s mechanics. Worn parts are replaced and the manufacturer backs the car with an additional warranty that kicks in when the original warranty expires.
Some of the automakers even offer low-interest loans on certified pre-owned cars.
For example, BMW is advertising 2.9 percent financing on a 2005 X3 or X5 SUV. The X5 is built at BMW’s Greer plant.
Depending on the buyer’s credit rating, Sitton said Acura offers loans as low as 1.9 percent for 36 months and 3.9 percent for 60 months.
For some customers, buying a certified pre-owned car almost is like owning a “starter car,” said Jason Branham of BMW of Columbia, borrowing an analogy usually used by homebuilders.
Hudson, who’s chairman of the American International Automobile Dealers Association, remains optimistic.
Historically, August is a strong month because buyers hope to snap up a good deal before the new models arrive in the fall.
Also, gas prices are backing away from $4 a gallon.
“Consumers are adjusting to the price of oil, although it never will be as low as it was in the past,” Hudson said.
In addition, Hudson noted that U.S. consumption of oil in the first half of 2008 dropped an average of 800,000 barrels a day — the biggest decline in 26 years.
“I see that getting stronger and stronger,” Hudson said. “I think the worst is behind us.”
