Record sales for recession-proof luxury cars

    Americans may be contemplating deflation and a third depression, while Europe is watching to see if Portugal, Italy, and Spain follow Greece to the brink of default, but luxury car sales are hotter than a heat wave.

    BMW's sales rose 13% for the first six months worldwide, compared to a year ago. Mercedes-Benz climbed 15%, and Audi went up nearly 20%.

    Ian Robertson, head of BMW sales and marketing, says, "In some cases, the automobile markets are recovering much faster than we expected. We aim to continue this upward trend in the second half of the year."

    Robertson was not alone in celebrating, or in seeing even better times ahead.

    "We plan to continue Mercedes-Benz's success with a significant increase in the third quarter," says sales and marketing boss Joachim Schmidt in a statement.

    These are not low-end sales either. Mercedes cited strong demand for its top of the line S-class cars, which can easily top $100,000 in the U.S., while BMW noted the robust performance of its flagship 7 Series, as well as the 5 Series GT.

    BMW also reported remarkable results for its ultra-expensive Rolls-Royce brand. Its six-month sales of 970 cars (that cost up to $400,000 in the U.S.) set a record, tripling the number sold a year ago. Deliveries in June quintupled.

    At the same time, cars at the bottom of the price ladder are suffering. Sales of Mercedes tiny two-seat Smart car sank 17%, while BMW's Mini brand rose only 7.6%.

    While the percent increases in the U.S. weren't as gaudy, overall sales numbers were strong. BMW sold 121,585 vehicles, up 6.2%, while Mercedes sales, on the strength of the new E-class, were up 22% to 103,700, and Audi rose 28% to 48,440. "The first half proved considerably better than we had expected, above all in European markets," says Peter Schwarzenbauer, head of marketing and sales for Audi.

    The growth is coming from Asia, particularly China, which is now the world's largest auto market. The appetite of the newly affluent population for luxury good seems insatiable.

    BMW's sales in China for the first half of 2010 more than doubled to 75,615.

    Mercedes also doubled its China sales, selling 60,500 Benzes so far this year.

    And Audi sold nearly two-thirds more cars in China than it did a year ago.

    "All of these premium brand automakers have been known globally as desirable and capable, but many of the people in these markets could only dream of actually buying one of their cars until now," says Edmunds.com senior analyst Karl Brauer.

    China and other emerging markets have an importance to these manufacturers that goes beyond sales. All of them are restructuring their product lines so they can meet strict new regulations for fuel economy and carbon dioxide emissions. They need to find new buyers who aren't wed to multi-cylinder, big-displacement engines.

    Brauer quotes a Mercedes executive who said the average consumer age of the hybrid S-class in China is 26 years old compared to 55 elsewhere. He adds: "It is clear that many people in China (especially the younger people who are on the rise in the growing market there) want the Mercedes-Benz image."

    This bonanza in upscale cars raises the stakes in the global luxury sales race.

    Mercedes' strong showing in June enabled it to pass Audi by 1,750 units and move into second place, with sales of 556,700 cars bearing the three-pointed star on the hood. BMW remains number one, with global volume of 585,755 units.

    Expect the winner to be the one who can best satisfy the Far East's demands.