At Lexus, BMW and Mercedes-Benz headquarters, the 2010 U.S. luxury sales title isn't officially a race. But don't tell that to the dealers, who are using big wads of factory cash to move the iron as the year winds down.
Lexus has been the top-selling U.S. luxury brand for 10 straight years, but this year both BMW and Mercedes-Benz are close. Through November, Lexus leads with sales of 201,769 -- 4,936 units ahead of BMW and 5,393 ahead of Mercedes, when Mercedes' Sprinter vans are excluded.
And this month all three brands are making dealer cash a bigger part of their incentive mix. That's in addition to some customer cash, low-interest financing on every model and huge lease-subsidy deals such as a Mercedes C300 for $339 a month for 36 months.
"There's heavy utilization of dealer cash this month," said Jesse Toprak, vice president of industry trends for TrueCar.com.
"But the leasing and financing deals that have run all year are also moving the metal."
BMW and Mercedes dealers get $10,000 or more cash on larger 2010 models, while Lexus is giving dealers up to $4,000 on the 2010 LS 600h L and LS 460.
In an unusual move, BMW is also paying dealers an additional $250 a unit, retroactively, if they hit their fourth-quarter sales quota. For Ted Datri, general manager of BMW of Dallas, that number is 473 units.
"It will be very difficult," Datri said. "But it's $120,000, and that is quite a bit of money."
Mike Devan, general manager of Mercedes-Benz of Pompano in Pompano Beach, Fla., likes the incentive mix of winter-event specials, $2,000 loyalty cash on the E class, $1,000 conquest cash and a pull-ahead lease program that forgives the final three to five payments.
But he says the $10,000 dealer cash on many 2010 models is irrelevant this month. "I blew out all my '10s in November," he said.
Despite their year-end incentives, luxury brands publicly play it cool.
For example, last month BMW CEO Norbert Reithofer said balancing volume, incentive spending and residual values is more important than a sales title.
"It is not our first priority to overtake Lexus in America," he said. "It is to be a very good premium brand."
John Mantione, general manager of Fields BMW in Winter Park, Fla., said BMW's year-end incentives mix is more focused, but restrained.
"I don't see them opening the bank account just for a title," he said. "I don't think that is their mind-set, and it will be a profitable plan for them."
Owner George Sharpe of Sharpe BMW in Grand Rapids, Mich., said his brand doesn't need a sales crown: "We want to win as many customers as we can, but our goal is not to beat Lexus."
According to estimates by TrueCar.com, BMW is spending $3,162 per vehicle in December, down from $5,600 last year. Lexus is outspending BMW with an outlay of $3,580, compared to $1,275 last December. Mercedes' spending is down $105 to $4,195.
Automakers have used more lease and financing deals this year because of the unusually low cost of money.
But makers of luxury cars traditionally sweeten the pot of dealer cash this time of year to hide the year-end sales push from customers, analyst Toprak said.
"Luxury brands need volume to drive profitability, like any automaker," he said.
"But they can't be seen to be chasing the No. 1 spot, because what they're really selling to their customers is exclusivity."