German luxury car sales slump

Sales at three of Germany's best-known luxury carmakers slumped in January as buyer's scaled back major purchases during the economy slowdown.

Audi AG, Bayerische Motoren Werke AG and Daimler AG's Mercedes Benz cars on Friday all reported a sales dip _ but saw shares rise as BMW said it would avoid a 2008 loss and Daimler announced strong orders for a new model.

Customers in the U.S. and Germany, two of the world's biggest markets for luxury cars, are cutting back and buying cheaper models _ or simply not buying at all, says Hans-Peter Wodniok, an analyst at Fairesearch in Frankfurt.

'We're seeing a reluctance and a downgrading. I think we're in a period where people are understating their wealth _ buying a BMW 3 series instead of a BMW 5 series,' he said. 'The smaller the cars, the better the numbers.'

Carmakers are worried and are asking European governments to follow Germany's lead in giving buyers a payment to jump-start the market by junking old cars in favor of new fuel-efficient models. Italy announced a similar program Thursday.

Stuttgart-based Daimler AG said its core Mercedes-Benz Cars division saw sales plummet by 31 percent in January. The unit _, which includes the Mercedes-Benz brand, AMG, Smart and Maybach _ sold a total of 62,000 cars last month, down from 90,400 in January 2008.

The Mercedes Benz brand alone saw a 35 percent decline. The news wasn't all gloomy. Daimler said it had received 30,000 orders for its new E-Class sedan, on the market for just four weeks. And it saw a 4-percent sales increase in January for its small Smart city brand. Shares rose 7.6 percent to euro24.43. Munich-based BMW said worldwide deliveries of BMW brand cars dropped 22 percent from the previous year to 60,248 vehicles. Sales of its compact Mini brand were down 35 percent.

Demand for Rolls Royce also fell. It sold 37 of its super-luxury cars in January compared to 41 a year earlier.

BMW also said sales for the whole of 2008 tumbled 5 percent, but that it expected to report 'clearly positive' earnings for 2008. That pleased investors and sent shares up nearly 10 percent to euro21.50.

Ingolstadt-based Audi, a unit of Europe's biggest car builder, Volkswagen AG, said it saw a 29 percent decline in sales in January, selling 56,200 cars worldwide, down from 78,679 in Jan. 2008. It blamed low consumer confidence and record sales a year ago. Its shares followed BMW and Daimler in rising 8 percent to euro391 while Volkswagen was down only slightly at euro257.23 in late Frankfurt trading.