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The Strife of Luxury Featured

If there were one segment to particularly worry about, its luxury cars. They face more challenges in the next few years than most people realize. First, they're cars, at a time when people prefer CUVs and SUVs. Next, they are coming back off-lease in large numbers, larger than the mass-market units as a percentage. What's more, they are coming back in the same colors and with the same option packages. Off-lease luxury cars today are a lot like off-rental program cars were 15 years ago. A black BMW 3-series is the new white Taurus. 

Going forward, there are challenges in keeping up with the government's fuel mandates. Luxury cars already use much of the technology experts say delivers the biggest gains in fuel efficiency. Physics creates a high hurdle to deliver both the performance consumers want and the mileage the government demands.

This pressure is already being felt. J.D. Power analyst Jonathan Banks said the low-end of luxury cars are only holding 30 percent to 40 percent of their value. They should be topping 50 percent. For dealers, this might prove good news if you can target aspirational buyers. Poor people still like status brands even if the rich are starting to shun them. It's an old story. But if you are the one selling cars at the low-end of the high-end market, look out. 

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