Luxury Vehicle Sales Stall in California

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Luxury Vehicle Demand Seen Slowing [Reuters]

Summary: Sales of luxury vehicles, which have grown 20 percent since 2000, have fallen 4% this year, and many analysts associate this decline with the housing slowdown. AutoNation, the largest auto dealership in the country, saw a 37% drop in last quarter's earnings. Car dealers in California have been unable to sell cars over $50,000, including the BMW 7 Series and the Audi A8. "When California has a hiccup, the premium luxury segment does get hurt, " says Art Spinella, president of CNW Marketing Research. Sales of Cadillac DTS, BMW 5 Series, Merecedes-Benz E Class and Lexus GS 430, have fallen 12 percent thus far in 2006. Although Lexus and Mercedes reported an increase in total sales since last year, top executives admit that they are paying attention to the housing trend.
Related links: AutoNation to reduce orders [Detroit Free Press] • Group 1 sees need to cut Big Three orders [Reuters] • Car Dealer Earnings Roundup: Group 1, Sonic Automotive Beat Estimates, Adesa Guides To Low End of Range
Potentially impacted stocks and ETFs: Toyota (TM), General Motors (GM), Bayerische Motoren Werke AG (BMW), Autonation (AN), Group 1 (GPI)

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