America’s Suv Thirst Hits Luxury Brands With Hidden Hangover

By Gabrielle CoppolaBloomberg News

Luxury carmakers benefiting from red-hot demand for lucrative SUVs are dealing with a behind-the-scenes headache because of just how swiftly demand has shifted away from their sedans.

The glut of vehicles being returned after their leases expire disproportionately affects premium lines like Daimler AG’s Mercedes-Benz, BMW AG, Toyota Motor Corp.’s Lexus and Volkswagen AG’s Audi, because they rely more on leasing than mainstream brands. Sales for luxury manufacturers’ car models have dropped dramatically the past few years, leaving them in a bind with both too much supply and falling demand.

“It’s not necessarily the overwhelming amount of vehicles, it’s the mix of those flood of vehicles,” said Scott Keogh, president of Audi of America. “You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs.”Luxury automakers reported fresh figures this week showing just how pronounced the preference for sport utility vehicles has become. Demand surged last month for models like the Audi Q5, Mercedes GLE and Lexus GX, and slumped for sedans, including the Mercedes S-Class, Audi A4 and Lexus GS.

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