After two decades of tooling around in one Mercedes-Benz after another, H.J. McPherson finally went American.
Unhappy with the rising prices of German luxury cars, the retired executive from Saratoga, Calif., traded in his 1981 Mercedes-Benz 380 for a 1988 Lincoln Mark VII in July.He couldn't be more pleased with the deal.
"I like my Mark VII Lincoln very much," McPherson said. "It's a peppier car, and of course, it's $20,000 cheaper. When I started buying Mercedes, I never thought about buying an American car. But the German automakers got carried away with the prices."
McPherson is not alone. Faced with German sticker shock, mainly due to the rapid rise in the value of the West German mark against the dollar, more and more affluent buyers, who once wouldn't be caught dead driving a Lincoln or Cadillac, are giving the domestic luxury car companies another look.
"The strengthening of the mark gives us an opportunity that we haven't had over the past couple of years," observed John O. Grettenberger, general manager of General Motors' Cadillac Division. "We've seen an increase in import trade-ins. We certainly hope we are capturing a larger portion of the luxury car market. We're working hard at it."
Lincoln and Cadillac, perhaps for the first time, are winning over buyers because they are so cheap - at least by comparison.
The mark's rise since 1985 has led to price increases of as much as 31 percent on West German luxury cars. "The appreciation of the deutschmark has certainly had a major impact on our pricing," concedes Thomas O. McGurn, a spokesman for BMW of North America.
"Luxury car buyers are price-insensitive only up to a certain point," said Scott Merlis, an auto industry analyst at Morgan Stanley in New York City. "They are starting to retrench and are turning to cars like the Lincoln Continental, which is one of the strongest products to come out of Detroit in years."
Although the trend has not led to an explosive revival in domestic luxury car sales, the return of some import-oriented customers has had an impact, especially at Lincoln.
For example, while Lincoln sales jumped 19 percent in the first half of 1988, BMW sales dropped 19 percent, and Mercedes-Benz posted a 3 percent decline.
While Cadillac has not seen the kind of growth enjoyed by Lincoln, it has at least reversed the long slide in its sales and market share it suffered in the mid-1980s. In the first six months of this year Cadillac sales rose slightly to 128,185, up from 127,142 units in 1987.
The turnaround for the domestics has helped Lincoln increase its share of the American car market to 1.7 percent, up from 1.6 percent in 1987, while Cadillac's 2.7 percent share remained constant.
The market shares of both BMW and Mercedes have eroded this year. In August, BMW's portion of the U.S. market dwindled to 0.65 percent from .9 percent in 1987, while Mercedes-Benz's share dipped from 0.9 percent last year to 0.8 percent.
Other German makes have suffered as well. Sales at Volkswagen's Audi Division fell 53 percent in the first half of 1988, hurt both by the mark's rise and the after-effects of widely publicized charges that its cars were unsafe. Porsche, hit harder by the stock market crash than any other car company, watched its sales fall more than 33 percent in the first eight months of 1988.
Some analysts explain the numbers by arguing that, in the wake of the stock market crash and the ensuing backlash against yuppies, the Germans have lost much of their status appeal.
"The German cars are perceived as Yuppie-ish," said Dennis Sperduto, an auto industry analyst at Argus Research in New York City. "That's something that some people don't want to be associated with."