BMW, Mercedes Poised to Overtake Lexus in U.S. Market

For the first time in over a decade, BMW and Mercedes-Benz may overtake Toyota Motor Corporation’s Lexus brand as the top-selling premium brands in the U.S. market.

Over the past four months, Lexus has trailed its German competitors in U.S. sales. Lexus was further harmed when the devastating earthquake and tsunami forced it to cut production by approximately 50 percent. All but one of Lexus’ models is produced in Japan.

Lexus was already struggling to rehabilitate its image following last year’s record safety recalls.

To capitalize on the situation, Mercedes and BMW have ramped up local production and increased incentives. They have also launched new models designed to boost U.S. sales.

Last month, BMW’s U.S. sales rose to 71,417. Mercedes’ U.S. deliveries for the month totaled 71,388 while Lexus’ sales fell to 64,932 units.

Eric Noble of the California-based industry research firm The Car Lab said, “The house was on fire at Lexus before the earthquake hit. If the current situation wakes them up to that, then some good may come from it.”

BMW has a four-month backlog of orders for its revamped X3. The company’s CEO Norbert Reithofer said customers are waiting as long as six months to take delivery of the $36,750 premium SUV.

In 2010, BMW moved production of the X3 form Austria to its expanded South Carolina factory.

BMW’s parent company, Daimler, is considering adding production of additional BMW, Mini or Rolls-Royce models to the plant which currently makes the X3, X5 and X6 SUVs. Reithofer said the company is looking to increase production capacity to 260,000 units annually in order to meet demand.

Mercedes is betting heavily on its refreshed C-Class, which debuted at last January’s Detroit Auto Show, to help it overtake Lexus and BMW in the U.S. market.

The company plans to spend $290 million to upgrade its Alabama factory which will begin making the upgraded M-Class SUV later this year.

According to industry forecaster IHS, Mercedes is on track to sell 254,100 vehicles this year to edge out BMW, with projected sales of 254,400, and Lexus with forecast sales totaling 192,900 units.

Edmunds analyst Bill Visnic said, “Lexus is in a sort of lull in their product cadence.” He points to the Lexus GS sedan as an example of the dilemma Lexus finds itself in. Visnic said the GS is “aging and doesn’t hold a candle to what BMW and Mercedes are doing.”

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