BMW Takes Lead in U.S. Luxury Market With Better Access to Chips

(Bloomberg) -- BMW AG's U.S. sales blew past rivals' in the second quarter as the luxury carmaker did a better job of stocking dealerships with new vehicles in spite of a global semiconductor shortage.

The German luxury brand sold 96,561 vehicles from April through June, almost double its deliveries a year ago and 35% more than in the first quarter of 2021. It outsold competitor Mercedes-Benz by 14,171 units in the second quarter, and took the lead in U.S. luxury sales year-to-date, edging out Daimler AG's luxury brand by 7,348 vehicles.

BMW seized on pent-up demand from pandemic-weary drivers as a global shortage of semiconductor chips continues to choke off auto production and limit supply.

The company is doing a better job of managing its hoard of semiconductors, which are needed to power everything from radios to braking systems, and that's helping it keep up with dealer orders better than some of its luxury rivals, said Marc Cohen, vice president of Priority 1 Automotive Group in Towson, Maryland. His company owns multiple BMW stores as well as Jaguar Land Rover, Audi, Porsche, Mini, Cadillac and Acura dealerships.

“Even though production is limited or lower, it's not coming to a halt like some of these other brands,” Cohen said. With inventory limited, cars being delivered now were ordered by customers two months ago, he said.

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SUVs from BMW's assembly plant in Spartanburg, South Carolina, take about six to eight weeks to arrive, quicker than the three-month wait for cars coming from Germany, he said.

While BMW's production surge in the second quarter suggests an influx of chips, it didn't disclose details of its supply-chain management strategy. Bernhard Kuhnt, chief executive officer of BMW's North American business, credited the “strength” of its production network in a statement. BMW's plants in South Carolina and San Luis Potosi, Mexico, aren't currently being impacted by the chip shortage, according to data from researcher AutoForecast Solutions.

That's a sharp contrast from a year ago, when BMW's Spartanburg plant, its biggest worldwide, was idled for weeks due to parts shortages. The X3 compact crossover, made there, was BMW's top seller in the quarter, notching an increase of 125% to 21,285 units sold. Sales of the X5 SUV rose 94% year-over-year, and the 3 Series sedan grew sales 86%.

Modest Gains

Mercedes' sales growth was more modest, up 39% from a year ago, and 5.3% from the first quarter. Crossovers dominated: The GLE and GLC models led deliveries, followed by the new, less expensive GLB subcompact crossover.

Toyota Motor Corp.'s luxury Lexus brand, which outsold BMW in the first three months of 2021, delivered 83,460 cars in the second quarter, led by the RX SUV. Sales grew 12% from the first quarter and were up 48% from 2020 year-to-date.

Volkswagen AG's premium Audi brand sold 66,995 vehicles in the second quarter, nearly double its year-ago deliveries. The Q5 SUV led sales with 18,835 units, nearly double the second-biggest seller, which is the larger Q7 SUV.

Inventory levels for Audi are getting “a little worse,” but they're not as dire as some of his other brands, like Jaguar Land Rover and Cadillac, Cohen said. BMW's shipments have also gotten a bit tighter, he said.

“We should have an OK July, but it depends -- if we have a great July, we might have a terrible August, and not because the buyers aren't there,” he said.