Auto Makers Offer Deals

New BMW’s are sponsored by factories with low interest rate financing deals. But it’s gone now because even luxury brands are shaken around by an unstable economy.

Many major luxury brands are promoting discounted rents or other price cutting deals to get sales. Brands like BMW, Tata Motors Ltd.'s Land Rover, Daimler AG's Mercedes-Benz, Toyota Motor Corp's Lexus, Nissan Motor Co.'s Infiniti tend to shy away from mass-market come-on like direct cash rebates or employee-pricing offers.

But deals are there just waiting for customers. In August, 63% of luxury vehicle sales involved some kind of cut-rate financing, compared to 43% a year earlier, according to data from the Power Information Network.

The average cash rebate offered by luxury brands in August was $3,240 PIN's surveys found. But a few brands went above and beyond. Land Rover's British-made SUVs went off lots in August with an average $7,016 cash rebate. Land Rover's deals outdid Cadillac and Lincoln – which have tended to discount more heavily than European and Japanese brands. General Motors Corp.'s Cadillac brand offered cash rebates averaging $4,105 dollars a vehicle last month, up from $2,758 a vehicle the year before, according to PIN.

Seasonal discount on automobiles

These discounts are just seasonal. It tends to be bigger in the fall due to launching of new models and during winter, according from Edmunds.com. Another reason is also the auto makers' product timing. When important model lines get old, the discounts rise.

Minor changes in the economy have less effect on luxury car demand because rich consumers usually don’t bother. But if the changes are major, even affluent people will rethink the importance of trading in a good car.

And this is happening now.

Sales in the "lower luxury" car segment, which includes the BMW 3-Series, Acura TL, Infiniti G35 and Lexus ES and IS models, are down 10.3% for the year through Aug. 31, according to Autodata figures. That's almost five times worse than the 2.1% decline for passenger car sales overall. Total luxury car sales are down 14.2% for the first eight months of 2008. Luxury sport-utility vehicle sales are down nearly 18% for the year so far -- a decline that understates the accompanying impact on car makers' profits.