This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cutting Back: Wealthy Car Buyers Trading Down




By Phil LeBeau, CNBC Correspondent

NEW YORK ( CNBC) -- Call it a sign of the wealthy in America being a little more cautious. Or call it a case where high-end car buyers are trading down so they don't spend as much for luxury cars and SUVs. Whatever you call it, it is clear sales of new models costing more than $75,000 have slowed down.

J.D. Power's Power Information Network has tracked sales for the first half of this year and broke them down based on the transaction prices. In other words, what did customers actually pay before they drove off the lot.

According to J.D. power, here's the data:

Under $25,000 (up) 8.3%

$25,000-$49,999 (up) 14.5%

$50,000-$74,999 (up) 19.1%

Above $75,000 (down) 3.7%

Industry: (up) 11.5%

More from CNBC
The Best Way to Explain Anything
Is the 30 Year Fixed Headed to 3 Percent?
NBA: Ads On Jerseys a Slam Dunk

Wealthier Customers Trading Down After getting the data, I called a number of dealers around the country to get a sense of why sales of higher-end luxury vehicles have slowed.

Dealers say their customers are still buying luxury cars and SUVs, but instead of paying $75,000 or $85,000 for a particular model, they are moving down and buying a similar model but for $10,000 or $20,000 less.

For example, look at sales of the Audi A8, A8L and S8 Quattro. In the first half of this year, sales of those cars are down 11.8% according to Autodata. By comparison, Audi sales overall are up 15%, outpacing the industry.

Another example is the Mercedes E Class. So far this year, retail sales of the E Class are down 5.7% while sales of all Mercedes brand models are up 16.8%, again growing faster than industry sales.

Finally, there's the Lexus LS 460. According to Autodata, LS 460 sales this year are down 28.9%, but Lexus sales overall are up 21.3%.

Why are customers trading down? Some of it is because of the economy and even wealthier car buyers are more cautious. So instead of spending $80,000 they are more likely to spend $50,000 or $60,000. And given the technology and styling put into many of the refreshed "mid-level" luxury models customers don't feel like they are trading down.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $125.80 -2.25%
FB $77.56 -1.59%
GOOG $531.81 -1.70%
TSLA $232.95 1.06%
YHOO $41.32 -1.70%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs