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Demand is strong for Europe's small luxury crossovers<p>Automotive News<p>June 15, 2009 -- European makes can't get enough of the small luxury crossovers they introduced this year. <p>The Audi Q5, Mercedes-Benz GLK and Volvo XC60 are bright spots for the three brands, whose U.S. sales overall have suffered in the recession. The new entrants are luring customers out of larger SUVs and sedans as well the Lexus RX 350 -- although the slightly larger Lexus remains the king of the segment. <p>The Europeans say they could take a bigger bite out of Lexus if they could get more units. That's difficult because demand is just as hot overseas. <br><B>For example, Volvo Cars of North America wants more units of the XC60 with all-wheel drive, says Tassos Panas, Volvo Cars' executive vice president of sales operations. </B><p><B>"The vehicle is doing extremely well. Dealers are trying to secure more inventory," Panas says. "There are no cars lying around in port, and we are asking to get as many as we can from Sweden." </B><p><br><B>Volvo has sold 2,495 units of the XC60 in the United States.</B> U.S. buyers are flocking to the smaller crossovers because they are roomier than sedans and ride like passenger cars but have decent fuel efficiency of about 20 mpg in combined city and highway driving. <p>The vehicles, priced in the upper $30,000s for awd models, are more affordable and socially acceptable than the brands' large SUVs, executives say. The large SUVs range from the mid- to high $40,000s and have fuel economy in the teens. <p>Ivan Drury, an Edmunds.com analyst, says fresh product helps. "The Audi Q5, Volvo XC60 and Mercedes-Benz GLK are all brand-new vehicles on the market for this year; therefore, they have the edge over anything currently out there, even if it has had a redesign," Drury says. "These vehicles can be considered part of their own segment." <p><br>The smaller, sportier European crossovers "carry the prestige of the luxury make but can be had for less than the typical luxury SUV," he says. <p>Leading in U.S. sales is the Mercedes-Benz GLK, the smallest and most controversial-looking of the vehicles. Since the vehicle's debut in January, Mercedes has sold 9,444 GLKs. Mercedes has 1.9 to 2.9 percent APR financing on the crossover. <p>Through May, the GLK has outsold the larger Mercedes M- and GL-class SUVs. <p>David Larsen, product manager for SUVs at Mercedes-Benz USA, says there are shortages -- especially of the two-wheel-drive GLK, which went on sale April 9. It has a base price of $34,775, including shipping.<p>Larsen says the GLK's styling -- resembling the boxy and military-looking Mercedes G class -- and its size are cited as key factors by buyers. That the GLK was launched against a larger, new-generation RX "could not have worked any better for us," Larsen says. A diesel GLK is being considered for the United States. <p>The Audi Q5 debuted in March; 4,377 have been sold through May. Sales of the larger Q7 were down 50.0 percent during the same period year on year. <p>With a base price of $38,025 a typically equipped version of the Q5 is selling for $42,800. Quattro awd is standard. Audi expects to launch a hybrid Q5 in 2011. <p>Audi has a 15-day supply of the Q5, and "we are fighting to get more production," says Barry Hoch, product manager for the Q5 and Q7 at Audi of America. <p>"We are trying to pull ahead model year 2010 to get more cars," he says. "We could sell more if we had more." <p><B>Through May, Volvo has sold 2,495 units of the XC60, which it launched in March. Volvo has offered one lease deal for $499 a month but no APR financing. Sales of the seven-seat Volvo XC90 are down 62.6 percent through May compared with a year earlier. <p>Volvo is the only maker offering loyalty cash -- $500 for a lease and $1,000 for a cash purchase. <p>The XC60 has a base price of $38,050 -- making it the most expensive of the new small European luxury crossovers -- but the average vehicle sells for about $40,000, Panas says. Awd is standard. And while the Northeast is the biggest market for the XC60, sales are brisk in California and other hot climates, Panas says. <p>"The segment has expanded dramatically because of all the new entrants, and we see XC60 holding its own," Panas says. <p>A front-wheel-drive XC60 goes on sale this summer with a $33,245 base price. </B><br>The Lexus RX 350 is the only model with an alternative powerplant. A new-generation RX hybrid is being launched. <p>The redesigned RX 350 went on sale in February. Lexus sold 32,614 RXs through May, an 11.1 percent drop year on year. <p>But Mark Templin, general manager of Lexus, says the RX 350 has been "a hit with customers, and it's the fastest-turning vehicle we have." <br>
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (tolis)

So the question is to which extent Volvo is increasing total sales with the XC60, vs. providing a substitute for the XC90.
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (Munin)

Speaking just for ourselves, only a couple of our XC60 sales have gone to XC90 owners.<br>BTW, there is no loyalty money on the XC60.
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (VolvoMax)

Max:<p>Curiously, how many XC60 sales do you think are "conquest" sales? I saw my first one on the road last week, one that was actually purchased and not on a test drive.
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (napster)

Again, going on our own example I would say probably 70% are conquest.
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (VolvoMax)

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD><i>Quote, originally posted by <b>VolvoMax</b> »</i></TD></TR><TR><TD CLASS="quote">Again, going on our own example I would say probably 70% are conquest.</TD></TR></TABLE><p>I have to say that our XC60 sales are made up of about 70-75 percent conquest customers too.
 

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Re: Strong demand for XC60,FWD XC60 to start from $33,245 (T Schroeder)

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD><i>Quote, originally posted by <b>T Schroeder</b> »</i></TD></TR><TR><TD CLASS="quote"><p>I have to say that our XC60 sales are made up of about 70-75 percent conquest customers too.</TD></TR></TABLE><p>Nationally, it is more like 50%/50% but that was a month ago.
 
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