European luxury sedans have long been identity builders for their brands. But with surging sales of crossovers, that may change.
Many brand executives, dealers and market watchers agree: Cars such as the Mercedes-Benz S class and the BMW 7 series remain their brands' flagship vehicles. And cars generally still make up the majority of luxury volume for some European brands. When compared with their crossover counterparts, European luxury sedans today have the strength of higher prestige pricing and more cutting-edge technology.
But that is evolving. As ultraluxury brands such as Bentley, Lamborghini and Rolls-Royce introduce crossovers priced well into six figures, automakers such as BMW and Mercedes are looking at higher-priced, more technology-packed crossovers of their own. Meanwhile, truck sales are quickly catching up for some European luxury brands and likely to soon pass car volume. As that happens, European luxury SUVs and crossovers will become image builders in their own right.
While the 7 series still functions as the flagship for BMW, the brand is likely to add a second image builder when the new X7 large crossover comes out in two years, said Ludwig Willisch, CEO of BMW of North America.
"We'll have a flagship among the sports activity vehicles as well," Willisch said.
Crossovers rose to 42.1 percent of BMW's U.S. sales in 2016. BMW's global sales and marketing chief, Ian Robertson, said he expects the U.S. to move to 50 percent crossovers, or sports activity vehicles in BMW's parlance.
"The SAVs are very important," Robertson said. "What's happened, it's fair to say, is the SAVs have taken up any growth, but sedans are going forward at a high level. They're not showing much growth potential, but it's still at a very high level."
Mercedes still considers the S class its flagship. A freshened S-class sedan will go on sale in the U.S. this year.
"I don't think the move to crossovers actually will have an impact on the S class per se," said Dietmar Exler, CEO of Mercedes-Benz USA. "It is the flagship of the industry. It is the flagship of Mercedes. That will continue. The first customer clinics that we've done on the new S class were really, really good."
The brand will have a new opportunity on the truck side when it redesigns its GLS large crossover and moves it to a more robust platform in 2019. It may then become a base for a new ultraluxury SUV carrying the Mercedes-Maybach name that would likely push into the six-figure range.
Crossovers and SUVs made up 46.6 percent of the Mercedes luxury mix in 2016, up from 40.2 percent the prior year. With car sales declining and truck sales soaring, trucks are likely to soon overtake cars in volume for the brand. U.S. sales of the brand's car lines dropped 11 percent in 2016, while sales of its SUVs and crossovers jumped 15 percent.