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Luxury sector buoyed by tame models

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Luxury sector buoyed by tame models

Even high-end vehicle shoppers eschewing sporty cars for more modest SUVs in down economy

Lawrence Ulrich / New York Times

The idea that luxury car sales are outpacing the industry at large may spark a knee-jerk reaction: The rich seem to be sailing right along in a bumpy economy.

But overall, the picture is more nuanced. Even people who can afford whatever they want seem allergic to anything that smacks of fun and frolic. Sports cars, luxury coupes and convertibles are gathering cobwebs. Sales of the Corvette, often America's most popular sports car, were fewer in 2009 than in any year since 1960.

As a class, luxury-car sales were up 12.4 percent in November, according to Autodate Corp., helped along by low interest rates that have brought on a leasing comeback.

But even with that increase, sales are off 30 percent from 2007, the year before the recession choked the market.

Analysts say it's not surprising that bold statements are out of fashion.

"When everyone is suffering, it doesn't feel right to buy a flashy $80,000 car," said Jesse Toprak, vice president of industry trends for TrueCar.com, a site that offers to help consumers find deals in their area.

Some big, fashionable SUVs, including the Range Rover, Land Rover LR4, Lexus GX470 and Mercedes GL-Class, have staged comebacks as well. Yet the smaller luxury crossovers — including the Audi Q5, Cadillac SRX and Volvo XC60 — are the industry's fastest-growing segment. Starting around $35,000, these models offer an SUV in a more modest, fuel-efficient package.

Sensible sedans are also doing well. Among Mercedes-Benz's eight-car lineup (not counting its crossovers and SUVs), its two most affordable, conservative sedans are responsible for more than 80,000 of the brand's 94,000 car sales through August: the entry-level C-Class, Mercedes' lowest-priced model at less than $35,000, and its E-Class, whose redesign has sparked a 70 percent sales jump in 2010. Yet Mercedes' more decadent models are largely in the tank: Only 5,000 buyers combined for the SLK and SL convertibles, the rich CL-Class coupe and fashionable CLS-Class.

Perhaps no car illustrates the dynamic better than Porsche's new Panamera, its first sedan. As with its Cayenne SUV in 2001, Porsche drew howls from sports car purists. But despite criticism of the Panamera's bulbous styling, the car's spacious back seat and otherworldly performance have impressed buyers, even with prices starting at $75,000 and ranging up to $150,000 for the 500-horsepower Turbo edition.

Porsche executives frankly call the Panamera an easier sell for today's families than an indulgent toy, like its classic 911. The Panamera's motto may well be: "See, honey? There is room for the kids."

"No one really 'needs' a 911," said Tony Fouladpour, a Porsche spokesman. "That's a purely discretionary purchase."

The Panamera has quickly outsold all Porsche sports cars, with nearly 5,000 buyers through August, compared with fewer than 4,000 for the 911. Together, the practical Panamera and redesigned Cayenne have grabbed nearly 60 percent of all Porsche sales.

A Cayenne Hybrid, on sale early next year, is among a group of electric-assisted luxury cars designed to meet the coming regulatory standards and snare the green-minded. Nearly every top-shelf brand, including Ferrari, Mercedes, Audi, Porsche, BMW and Lotus, has electric or plug-in hybrid models in the works.

Even in flush times, relatively few people are willing or able to spend six figures on a car. Before the financial crisis, Bentley rode hits like the $170,000 Continental GT to tenfold sales gains in the United States — but that still amounted to less than 4,000 cars sold in 2007.

In this ultra-luxury segment, which includes Bentley, Rolls-Royce, Ferrari, Lamborghini and Aston Martin, sales nearly halved to 6,151 last year from almost 12,000 in 2007. Even in 2010, with the segment revived by 15 percent, only about 2,000 Americans will feel ready to splurge on a Bentley.

Yet "even in a bad economy, people don't give up their dream," Christophe Georges, president and chief operating officer of Bentley Motors, said hopefully as he discussed Bentley's Mulsanne, a striking $285,000 flagship sedan.

Robert Herjavec would agree. The Toronto-based car enthusiast and technology entrepreneur has a new $200,000 Mercedes SLS AMG gullwing, a $420,000 Rolls-Royce Phantom Drophead Coupe — and for every day, a $90,000 BMW 750Li.

Yet in early 2009, Herjavec held off on new vehicles.

"The pervasive attitude was, 'what's the point of all this cool, fun stuff if the world's coming to an end?' " said Herjavec, a cast member on the ABC reality show "Shark Tank." "But now there are some fantastic new cars, and the people who love them are coming back."

From The Detroit News: http://detnews.com/article/20101209/AUTO03/12090336/Luxury-sector-buoyed-by-tame-models#ixzz17clTsvup

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