Analysis: China, USA Competing For Allocation As Luxury Crossover Sales Race Begins

Derek Kreindler
by Derek Kreindler

Even though I tipped the Audi Q3 to win the compact crossover sales race, a story in Automotive News highlights another problem that Mercedes, and other luxury brands, could face: a lack of inventory.

Back in the spring, a source at Lexus told TTAC that one of the biggest issues with the upcoming Lexus NX would be getting allocation. While the United States was expected to be the biggest market or the NX, China would also be competing for volume. The fact that the NX could be sold at a much steeper sticker price in China meant more profit for Lexus, and a stronger case for allocating more units to that market.

Now, AN is reporting on a similar situation for the Mercedes-Benz GLA. The outlet reports that Mercedes CEO Steve Cannon said

“…the United States is competing for vehicle allocation with China, where demand is equally strong. The United States is Mercedes’ largest market, but China is likely to become No. 1 next year…”

While the GLA and its twin, the CLA, are built exclusively in Hungary, and the Lexus NX is built exclusively in Japan, the Audi Q3 is built in three factories, including one in China, while the BMW X1 is also built in multiple factories worldwide, with its own Chinese assembly location. Both the Q3 and GLA will have North American production in the near future, with factories in Mexico, but neither Daimler nor Volkswagen have completed building those plants.

The lack of diversity in assembly locations could lead to a bottleneck in supply for both the GLA and the NX. For dealers in the United States, this means a hot product that has little room for negotiation thanks to outsized demand and little supply. But you can be sure that the American sales and marketing arms of Mercedes and Lexus will be clamoring for every single unit they can get.

Derek Kreindler
Derek Kreindler

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  • JD23 JD23 on Aug 12, 2014

    That Mercedes GLA is hideous; the Chinese would be doing my eyes a favor if they purchased every single one

  • Trend-Shifter Trend-Shifter on Aug 13, 2014

    I still say you need to put the 2015 Lincoln MKC on the list of your luxury crossover sales race. It may be off your radar but it is flying stealth.

  • Lou_BC Question of the day: Anyone actually care to own an old TVR?
  • Bd2 First, this was totally predictable. 2nd, Genesis already does have hybrids in the form of a 48V mild hybrid, but more performance oriented (supercharged and turbocharged), so not really helping with regard to fuel consumption. 3rd, Hyundai's hybrid systems don't really help as there currently isn't one that would be suitable power-wise and the upcoming 2.5T hybrid system would have to be heavily reworked to accommodate a RWD/longitudinal layout. 4th, it seems that Genesis is opting to go the EREV route with the GV70 the first get the new powertrain.
  • Bd2 Jaguar's problem was chasing the Germans into the mid size and then entry-level/compact segments for volume, and cheapening their interiors while at it.
  • 3-On-The-Tree Aja8888 I expected that issue with my F150 starting at 52,000mi. luckily I had an extended warranty and it saved me almost $8,000. No more Fords for me, only Toyota.
  • Lou_BC I saw a news article on this got a different read on it. Ford wants to increase production of HD trucks AND develop hybrid and EV variants of the SuperDuty. They aren't scaling back EV production. Just building more HD's and EV variants of HD's .