As 2016 gets rolling, luxury auto sales are slowing, incentives are rising and trucks are dominating.
Though U.S. luxury-brand sales dropped 3.5 percent in January, many luxury-brand executives forecast sales increases for the segment in 2016. But they expect growth will slow even as incentives rise.
Those are among several challenges luxury automakers face. Others:
- Declining car sales in a truck-crazy marketplace. Luxury brands generally rely more on car sales than trucks. Luxury automakers are adding truck production, but not fast enough to keep up.
Demand may have reached a tipping point: Luxury truck sales outpaced luxury car sales each of the last three months, though the segment still sold more cars than trucks for all of 2015, according to the Automotive News Data Center.
- China's slowdown. Vehicles that previously would have gone to China are being redirected to the U.S., putting more pressure on automakers' U.S. units. This has been a factor in rising luxury car inventories, analysts and retailers say.
- Margin pressures and soaring inventories. Retailers are feeling the sting. AutoNation Inc. said it saw a 49 percent increase in luxury stocks in the fourth quarter that will require months to sell down.
Audi of America President Scott Keogh expects the pace of luxury sales growth to cool to around 3 to 4 percent this year after several years of rapid growth, including a 7.7 percent gain in 2015.