• Jul 19, 2010
There's a three-to-four month wait for a new 5 Series and BMW has raised its 2010 global forecast to 1.4 million units. Mercedes-Benz Q2 production exceeded 300,000 units and Daimler's operating profit for the period was €2.1 billion ($2.7B U.S.) Audi's percentage increase in sales in 2010 compared to last year has outdone both BMW and Benz. The reasons for all that, says Bloomberg, is new product, growing U.S. demand and Chinese-market growth "that's way beyond expectations."

While there's an undeniable story in the recovery of U.S. sales, this is even more so about China. The demand for luxury by that country's million or so millionaires and their underlings is a leather-lined sinkhole, and the three German manufacturers are doing everything they can to fill it. Their best is barely enough. Benz and Bimmer have added workers and shifts this summer to try and fill orders.

From the sounds of it, they might not be able to manage that this year – China's appetite is such that the demand "won't be easily derailed even if economic growth slows," according to one analyst. If nothing else, and assuming the analyst is correct, it should lay a decent foundation for 2011 and perhaps allay some concern about that double-dip recession talk.

[Source: Bloomberg via BusinessWeek | Image: Doug Kanter/AFP/Getty]


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  • 27 Comments
      • 4 Years Ago
      I've often thought that all other countries should just stop engineering and producing automobiles -- just leave that to the Germans. They seem to be the best at it.
        • 4 Years Ago
        I dunno, there's lots of cars from Germany that I would avoid and similarly plenty of cars from other places that I'd love to buy so quit drinking whatever MB/BMW/VW/Audi Kool-Aid you're drinking.
        • 4 Years Ago
        Sounds like their brilliant marketing machine has successfully brainwashed you.

        They make some exceptionally good cars undoubtedly, but they are neither always the best nor are they the only purveyors of great cars. Regardless, some people simply don't like German cars, like they prefer pasta, etouffée or hamburgers over sauerkraut, or they have a sense of individuality that keeps them from buying the same car everyone has in black or silver in a desperate attempt at acquiring ersatz status.
        • 4 Years Ago
        The Mercedes of late 1990s/early 2000s were engineering disasters which caused the brand to fall off a cliff in quality rankings.
        • 4 Years Ago
        It's a status thing more than anything.
      • 4 Years Ago
      I saw years ago that this would happen. China has all the potential to become world's largest luxury car market, especially given the Chinese tendency to flaunt their wealth. Whenever I see a flashy German car, 3 out of 4 times, the driver is Chinese. It's a trait of all post-command-economy countries. Russians are no different. They'll live with their parents, but they will drive a 3-Series. Trust me, I'm Russian. ;)
      • 4 Years Ago
      The Chinese buying more and more German cars? Thanks, I feel much better about the US economy with that news.
        • 4 Years Ago
        Yeah, not sure what the Chinese buying more German cars had to do with the US not having a double-dip recession either.

        Sure, we're in a global economy, but China(being the odd communist/free market that it is) has a way of managing itself such that it always seems as though it's growing even if the underlying data would show otherwise.

        That said, it's a country with a huge population of which the majority have not previously had access to the luxuries that they do now(due to the freeing up of their market over the years). As such, demand for those luxuries is super high and there is a ton of demand to fill due to that large population. Around much of the rest of the world however, our economies are developed enough that much of the demand for luxury items is largely filled. Doesn't meant they still won't grow, just not at the exponential rate that the Chinese demand has been.
      • 4 Years Ago
      Because it should grow proportionally? My standard of living has increased disproportionally since the 70's (not that I actually lived that long), and the average lifespan has grown exponentially as well. So what if they make way more money in terms of proportions? It doesn't matter because they're not the only ones benefiting from it.

      Is it so hard to understand the impact of wealth creation? I'm f'ng glad Bill Gates is a multi-billionaire, he deserved it.
      • 4 Years Ago
      Don't forget that many companies give auto stipends to get around high taxes by making it an expense. You will see this exponentially higher in high tax economies.

      Not that it's a direct corelation, but keep this in mind.....
      • 4 Years Ago
      As "bottomless" as America's appetite for SUVs?

      ... oh wait.


      Yeah, keep on relying on ideas those kind of ideas... I mean I know for a "fact" that housing in the US will ALWAYS go up, and up and up. Same deal with internet stocks and countless other things that will never fall.

      :facepalm:
        • 4 Years Ago
        Let me just start out by saying eff SUVs! Now that i got that out of my system, i"ll respond to your comment. SUVs are still here, unfortunately. So yes, people keep buying them. Its worked. GM has relied on them and they keep selling so i'm not understanding what you mean by "oh wait..."
      • 4 Years Ago
      The widening gap between rich and poor in every country is the big story behind this. The dull economy has hardly phased those with the means to buy luxury. This won't change anytime soon either.
        • 4 Years Ago
        Oh yes, this meaningless mesurement that we call 'wealth gap'.

        Regardless of the increasing wideness of the gap you have to understand that the poor have also being getting richer, just not at the same rate because their productive input into the economy is nowhere near as high, but they're benefitting from the economic pie getting bigger nonetheless.

        Anyone with a bit of common sense knows the solutions are as follows: status quo, which theoretically and practically means the end of innovation (at least on an economic scale, because trade is what makes hummanity what it is), reducing the gap through wealth redistribution, which means everyone loses but the politicians, or letting the gap widen because anyway everyone benefits from wealth creation, except the nature when it's taxed by corporatism of course.

        If more and more people can afford Bimmers than means the technology involved in their luxo-mobiles will trickle down to the econoboxes of the everyday people, from India to the United States which can not only lead in productivity gains, but freetime gains and general quality of life gains; everyone benefits yet again.

        If you think economics is all fixed-pie B/S and a win-lose relationship you should probably be a politician.
        • 4 Years Ago
        You're spot on. In the US the percent of wealth captured by the top 1% (thanks, W.) about equals that in 1928 (28%), compared to the 8-9% they captured in the late 1970s. Our corporate/CEO-owned government is incapable of fixing this in the short term, but in the long term it is quite dangerous.
        • 4 Years Ago
        I'm not sure about that. If more people are buying these, I don't think it is wealthy people buying five more E55s. To me, this shows that more people can afford these vehicles (especially in this day of tight credit, it forces people to spend more cash up front - meaning fewer "posers").

        That means more people are "making it." That's a good thing. This imaginary "wealth gap" is kind of silly.
        • 4 Years Ago
        And you obviously don't understand the "wealth gap". The wealth of the country increases, surely, and wonderfully, but the top 1% disproportionately grows compared to the median households wealth. This isn't something that's made up. It can be measured. Has been measured. But of course Conservatives don't believe in math and science, only in their own realities.
        • 4 Years Ago
        Not so fast, Paul.

        The article makes it seem that the Germans luxury auto makers are taking over the world, which is far from the truth. Let's look at BMW, for example, starting with Europe. Yes, sales are up while the market overall is down, but there are other manufaturers that are doing even better.

        BMW increased sales by 8% in the EU plus EFTA countries during the first 6 months, but during the same period Nissan sales increased 32%, Renault 21%, Volvo 21%, Kia 13%, Hyundai 10%, and Peugeot 9%. That's 23,000 more cars for BMW versus 110,000 more for the much larger Renault, 52,000 more cars for the smaller Nissan; and 21,000 more for Volvo, the smallest of the above brands. On the other hand, Audi and Mercedes sales decreased.

        The Germans are also not the only ones doing well in China. BMW Group (BMW and MINI) sales doubled in China during the first six months compared to last year, but that's only an additional 38,000 cars. GM sold nearly 400,000 (48%) more cars in China during the same period compared to last year. Ford sold over 100,000 (53%) more cars than it did last year.
        • 4 Years Ago
        Paul: I was referring to the US market. If you fall into the top 1% great for you.... but my guess is you don't. So, you've successfully been brainwashed by Glen Beck into believing that the top 1% raking in all the wealth of our wonderful country is a good thing for the rest of us.
        • 4 Years Ago
        For some reason I'm being raped by the commenting service right now:

        Because it should grow proportionally? My standard of living has increased disproportionally since the 70's (not that I actually lived that long), and the average lifespan has grown exponentially as well. So what if they make way more money in terms of proportions? It doesn't matter because they're not the only ones benefiting from it.

        Is it so hard to understand the impact of wealth creation? I'm f'ng glad Bill Gates is a multi-billionaire, he deserved it.
        • 4 Years Ago
        Wow...some people on here probably read Huff n Puff post blog every day and are brainwashed by the silly socialist left. As stated above, first of, BMW is growing in sales, but not as fast as other manufacturers producing cars for segments much lower than the 5er sedan for instance. So it means that the overall economic pie is getting bigger in China, in contrast to US where economic pie is still the same, but people want a larger bite.

        I do concur that middle class is getting wiped out, but this is happening because of 1) leverage 2) inflation 3) manufacturing jobs going overseas. Manufacturing jobs are disappearing due to insane regulation, taxes, and there are certain government agencies which actually encourage businesses to take their labor to other parts of the world.

        This is because Keynesian economists in US and UK believe that certain jobs should be forcefully exported with government assistance (hence intervention into free-market) because that would free up resources for other and better jobs. I think it is nonsense. US needs manufacturing jobs, but liberals don't believe it, they just want tariffs, quotas, unions, and picketing NUMMI plant. That is the solution to those people.

        China is not an export country, it is a production country and just watch what will happen once Yuan appreciates. Their society instead of exporting their products, instead will demand them for their own consumption because purchasing power will be higher. In turn this will mean less goods to US which will mean higher price 1) due to inflation 2) demand from China.

        Today Bloomberg reported that China this year was the top consumer of energy, overtaking US which has been holding that spot for one hundred years.

        So I'm sorry to say this but US is going to get exactly what it deserve, which is a bankrupt federal government and states. But US is really good at diverting attention to make-up enemies, so they'll go to war.

        Surprising thing is I consider myself to be a liberal. I am for gay marriage, legalization of certain drugs, keeping bars open after 2am (hello Detroit!), anti-war, against military-industrial complex, pro-choice and so forth. But when it comes to economics I believe in small government, zero tolerance for corporate-to-government relationships, and yes that means getting rid of medicare, medicaid, and getting rid of unnecessary department such as department of education for instance.
      • 4 Years Ago
      I believe it. With the US nouveau riche doing well right now and the fact that they would rather kill themselves than be seen in anything but a German car, sales will only keep on growing.
        • 4 Years Ago
        Too bad not enough poseurs are seeing the alternate through
      • 4 Years Ago
      America is no longer the number one market for cars.
      • 4 Years Ago
      In the U.S., so-called "luxury" brands have seen sales success due to increased affordability but far more because pricing has decreased (at least when adjusted for inflation) and leasing has become so popular than because people are making more.

      Compare what Mercedes-Benz E-Class, S-Class, etc. models were selling for in the 1980s and 1990s vs. today e.g. a 1995 E320 Cabriolet started around $80k while the 2011 E350 Cabriolet starts at just $58k which is practically half-price when adjusted for inflation.

      The increasing affordability of once "luxury" brands is what helped kill the mid-range brand (Oldsmobile, Mercury, etc.) market.
        • 4 Years Ago
        I agree. There used to be a question as to whether Infiniti was a near-luxury or luxury brand. Well, it's squarely a luxury brand now, because the market has come down to meet them.

        Not that they are bad cars, but the difference between a G37 and a good Accord is pretty small nowadays compared to what used to be the difference between a Lincoln and a Dodge.
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