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As the U.S. economy continues to show signs of recovery and incomes in developing nations continue to rise, demand for German luxury cars is expected to increase and will likely provide positive price support to the iShares MSCI Germany Index (EWG).

According to a recent article in The Wall Street Journal, BMW AG (OTCPK:BAMXY), Daimler AG (OTCPK:DDAIF) (maker of Mercedes Benz) and Volkswagen AG (OTCPK:VLKAF) (parent of luxury brand Audi) are all on track to reach record sales in 2011. In fact, in the first quarter of the year, sales of BMW rose 21% from a year earlier, those of Audi (OTCPK:AUDVF) were up 18% year-to-year and Mercedes-Benz witnessed a jump of 13% when compared to the same period last year.

As for the remainder of the year, this trend is likely to continue. In fact, some marketers, such as AutoNation (AN), the nation’s largest auto retailer, will spend $100 million through 2012 on new and renovated showrooms for Mercedes-Benz, BMW, and Audi to entice the affluent consumer.

As mentioned above, EWG is likely to reap the benefits of increased consumer spending by the affluent consumer, as it allocates nearly 12.1% of its assets to BMW AG, Daimler AG and Volkswagen AG.

Disclosure: No Positions

Source: Germany ETF May Get Luxury Car Boost