While luxury cars like the Jaguar S-type, the Mercedes Benz S-class and others in the $US40,000 to $90,000 range are seeing sales drift down, buyers are flocking to luxury SUVs, CBS Marketwatch reported.

“The luxury SUV has been growing steadily for several years and the midsize luxury car (segment) has been declining. A lot of those people are moving to luxury SUVs,” Tom Libby, senior director of industry analysis at the Power Information Network, an affiliate of JD Power & Associates told the news agency.

Citing CNW Marketing Research, the report said sales in the luxury-car segment have fallen 5.3% year-to-date compared with the same period last year, while sales in the premium SUV segment, including VW’s Touareg and General Motors’ Cadillac Escalade, are up almost 21%, and sales of premium sport wagons such as the Cadillac SRX and Porsche’s Cayenne are up about 33%.

In the meantime, many buyers who might have bought luxury sedans in the past are gravitating to more moderately priced “near luxury” models, CNW president Art Spinella reportedly said, citing the new Chrysler 300C. “It’s drawing people from the old luxury brands like the Lincolns and the Cadillac sedans.”

Those driving the rise in luxury SUV sales tend to be younger buyers, 47 years old on average compared with 55 years old for mid luxury cars, according to the Power Information Network, CBS Marketwatch said.

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The report said that more buyers also are opting for entry-level luxury, such as the BMW 325, retailing at $28,000, or the Cadillac CTS or Jaguar X-Type, both starting at about $30,000.

“The growth is in the sport wagons and the near-luxury segment. That’s what’s growing,” Spinella reportedly said, adding that the entry-level luxury group saw sales rise almost 17% year-to-date compared with the same period last year.

Champion also said: “A lot of the car manufacturers see (near-luxury) not only as a good place to make money, but it also gives them almost a halo car that they can sell lesser models with.” BMW, Mercedes-Benz and Acura “came out with lesser models that almost have a mystique: ‘I’m buying something that Donald Trump might buy.’ “

According to CBS Marketwatch, some industry watchers say the luxury segment has grown so broad it’s not even a segment anymore. “It’s more like a broad swath of vehicles that are appointed for luxury that will do almost anything you need a car to do,” said Brian Chee, automotive editor at Autobytel.

Referring to the upcoming Lexus RX400h, Chee reportedly added: “We’ll see hybrid technology also become part of the (luxury) conversation. There’s enough room there … to work a higher price into a model and it’s also something a luxury shopper would be interested in purchasing.”

But CBS Marketwatch cautioned that, as automakers expand their luxury offerings, into the near-luxury segment and elsewhere, some pundits say their luxury brand image could suffer, and reliability may drop as well.

“When you have a company with a range of products that starts at $360,000 for a Mercedes-Benz Maybach and drops all the way down to the high 20s right now, from my perspective that’s too wide a range and there could be some brand erosion over time at Mercedes-Benz,” John Honiotes, vice president of automotive operations at Autobytel, said.

In fact, Mercedes-Benz has had a number of issues regarding quality and no small part of those issues was tied to having to pump out a lot of products,” Honiotes added.

The Mercedes-Benz S430 (about $79,000) and E320 ($53,000), the Jaguar S-Type 4.2 ($53,000), the Cadillac CTS ($38,000), and the BMW 745Li ($81,000) were cited as having poor reliability in a Consumer Reports article earlier this year, the report noted.

“That’s really the big Achilles’ heel with luxury cars. You have a lot of features on a relatively expensive car,” Champion reportedly said, noting that BMW’s new iDrive system, designed to provide convenient cabin controls in one place, was frustrating to use.

“Nowadays, time is extremely money. Nobody wants to be stuck with a car where something goes wrong,” he said. “That’s why Lexus has done so well in introducing extremely reliable cars. In terms of comfort and coddling the occupant and having bulletproof reliability, they’ve come to the top of the pack.”

Noting that Consumer Reports gave an “excellent” reliability rating to just two of 10 cars tested – the Lexus LS430 ($66,000) and Lexus ES330 ($35,000) – CBS Marketwatch said it’s perhaps not surprising that Lexus leads the luxury makers in market share, with 1.78% of the total car market, according to car research site Edmunds.com. Close on its heels is BMW, with 1.56% of total market, Cadillac with 1.39%, and Mercedes-Benz with 1.26%.

And, the report added, while some luxury car makers have moved down to near-luxury, others are trying to move up – such as VW’s move into luxury with the Phaeton sedan — the W12 model starts at $80,000 — and the Touareg.

“Probably the most successful thing BMW and Audi ever did for their bottom line was to transform themselves into a luxury nameplate,” Karl Brauer, editor in chief at Edmunds.com, said. “And VW is now trying to do that with the Phaeton and the Touareg. Luxury has become far more popular in the last 25 years, and everybody wants a piece of it.”

CBS Marketwatch said some say the trend towards a broader luxury segment will continue, and some automakers will, to a large degree, abandon their budget and economy cars.

“Everybody is trying to move their product line to (cars) that are reasonably profitable, pretty much forsaking some of the entry level or mid level cars because they can’t make enough money off of them,” Spinella said, noting Korean imports now comprise about 80% of the budget segment.

Currently, 21.6% of all car sales are luxury cars and trucks, up from 20.1% a year ago, he reportedly added. And while overall industry sales are up about 2.5% this year compared with last year, the luxury and near-luxury segment is up almost 7% combined.

Spinella told CBS Marketwatch: “The luxury market as it’s defined today is going to wind up a larger and larger share of the total industry, simply because it’s the only place they can make a profit off building and selling cars.”