Analyst and forecaster CSM Worldwide is taking a bullish line on prospects for luxury vehicle sales in the US. The luxury market has nearly doubled during the past ten years, and CSM projects it will expand another 39 percent by 2009.

"Demand for luxury automobiles has been driven by favourable demographic trends and new product introductions," says Joseph Barker, manager of North American sales analysis at CSM. "The luxury market of the future will flourish from continuing population and income growth, more new products, and incremental volume from existing nameplates. We expect the luxury market to grow more than 800,000 units to nearly 2.9 million by the end of the decade."

CSM asserts that the sizable Baby Boomer population, about 75 million, is at the forefront of the movement towards luxury vehicles. The Baby Boomers are reaching their peak earning years and are rewarding themselves with the finer things in life. To a smaller degree, Generation X has joined the movement as they become more established in their careers and seek expressive vehicles.

Surging incomes also are a contributing factor. By far, the fastest growing income bracket has been $100K+, followed by the $75,000-$99,999 category. Growing incomes along with record-level incentives and low interest financing have made luxury models more affordable and within reach of a broader range of consumers.

While favourable demographic trends are triggering the demand side of the luxury movement, an onslaught of product is fuelling the supply side.

CSM points out that a flood of luxury automobiles entered the US market in recent years and OEMs are staging a new wave of products that will continue the momentum well into the foreseeable future, according to CSM. Over the past ten years, 40 new luxury models penetrated the U.S. market and another 18 are in the pipeline before 2009.

The 74 percent model growth rate since 1995 has been sparked, in large part, by a market shift from passenger cars to light truck offerings. Trucks accounted for a mere 3 percent of the luxury market ten years ago; today, trucks make up 32 percent of the luxury market and are expected to represent 44 percent of the market by 2009.

Barker added, "Behind those numbers are, one, auto companies dedicating resources to high-end CUVs, sport wagons, SUVs and even full-size pickups; and two, a customer base that is willing and able to consume the market's prestigious products."

Several successor models to existing nameplates will contribute significantly to the future luxury market growth as well. A number of existing nameplates will be adding body styles, expanding engine line-ups and/or benefiting from additional plant capacity when successor models are launched.

CSM also stresses that the luxury category is evolving into a more inclusive segment as a growing number of mainstream brands are moving up-market while traditional luxury marques are moving down-market to widen consumer reach.

Looking ahead, CSM sees OEMs increasingly focused on flexible platforms in an effort to integrate a wide range of luxury offerings that are appealing to a broad base of consumers. At the same time, suppliers will be faced with the challenge of developing leading-edge technology solutions in areas such as telematics, safety systems, and powertrain for a luxury market that is expanding with global influence.

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