Autos | Financing

Luxury carmakers are making deals

Here's something you don't see every day: factory-sponsored, low-interest-rate financing deals on new BMWs. But they are out there now, because even luxury brands are getting bounced around by a choppy economy. Several major luxury brands, including BMW, Land Rover, Mercedes-Benz, Lexus and Infiniti, are promoting discounted leases or other price-cutting deals to spur sales. These brands tend to shy away from mass-market come-ons such as direct cash rebates or "employee pricing" offers. But the deals are there waiting for customers who start bargaining. In August, 63 percent of luxury vehicle sales involved some kind of cut-rate financing, compared with 43 percent a year earlier, according to data from the Power Information Network, which harvests transaction data from dealerships.

The average cash rebate offered by luxury brands in August was $3,240, up from $2,624 a year earlier, PIN's surveys found. But a few brands went above and beyond. Land Rover's British-made SUVs went off lots in August with an average $7,016 cash rebate tucked into the glove box, according to PIN data. Land Rover's deals outdid Cadillac and Lincoln — which have tended to discount more heavily than European and Japanese brands. General Motors Corp.'s Cadillac brand offered cash rebates averaging $4,105 a vehicle last month, up from $2,758 a vehicle the year before, according to PIN.

Discounts in the luxury vehicle segment are seasonal and cyclical. They tend to be richest in the fall, when carmakers launch their new models, and in the dead of winter — December and January, according to data from Edmunds.com, which tracks the ebb and flow of incentives. The cyclical part has to do with the automakers' product timing. When important model lines get old, the discounts rise.

Minor ups and downs in the economy tend to have less impact on luxury car demand, because affluent consumers usually ride out those dips without much real damage to their financial profiles. But if the storm gets violent enough, even well-to-do people will rethink whether it's essential to trade in a perfectly good car.

That's happening now. The coinciding crunches in the real-estate market and the finance industry apparently have prompted difficult discussions around kitchen tables, even in homes with granite countertops.

Sales in the "lower luxury" car segment, which includes the BMW 3-Series, Acura TL, Infiniti G35 and Lexus ES and IS models, are down 10.3 percent for the year through Aug. 31, according to Autodata figures. That's almost five times worse than the 2.1 percent decline for passenger-car sales overall. Total luxury car sales are down 14.2 percent for the first eight months of 2008. Luxury sport-utility vehicle sales are down nearly 18 percent for the year so far — a decline that understates the accompanying effect on carmakers' profits.

BMW's U.S. marketing arm has extended its low-interest-rate financing offers on 2008 models to the end of October, though the deals on certain models aren't as generous as in August. If you qualify, you can get a 0.9 percent loan on a 335i sedan or a free automatic transmission.

Luxury carmakers are making deals 09/24/08 [Last modified: Wednesday, September 24, 2008 12:19pm]

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