Mercedes-Benz just dethroned BMW as the king of luxury cars in America

The results are in. Mercedes-Benz is now the top selling luxury car brand in the US.

Mercedes took the top spot selling 340,237 vehicles in the US in 2016. Lexus followed in second place with 331,228 cars sold.

2015's king of the hill, BMW, finished third with 313,174 sales.

Audi, which many observers now think of as a fourth member of the "Tier 1" luxury car club, sold 210,213 vehicles.

That's around 100,000 fewer vehicles than each of the Big Three, but Audi has been coming on strong in recent years

The Tier 1 auto brands have not experienced the same red hot sales figures as the rest of the industry.

In fact, only Audi experienced positive growth with sales up 4% over 2015.

Why?

The blame falls on coupes and sedans.

Over the past few years, growth in the US auto market has been concentrated in crossovers and SUVs - a fact that extends into the luxury segment. Traditionally, the Tier 1 brands could reliably depend on their luxury coupes and sedans to generate sales volume.

While the sales volume is still there, growth isn't.

Of the 31 non-crossover/SUV models offered by the four major brands, only five saw sales grow in 2016 - the Audi A4, R8, and TT along with the BMW 2-Series and 7-Series. In the case of these 5 models, all except the BMW 2-Series can attribute growth to pent up demand driven by the availability of a new generation product.

As a result, the four major brands live and die with their crossovers and SUVs.

Neither Mercedes-Benz nor Lexus had any of its non-SUV models experience sales growth and yet, the brands managed to finish one-two in total sales. That's because both feature incredibly strong portfolios of SUVs.

The new compact GLC crossover has worked wonders for Mercedes' SUV lineup. GLC sales grew 71.6%. The full-size GLS and ultra-premium G-Wagon models saw sales increase by roughly 9% respectively.

For Lexus, its strong stable of SUVs have been a saving grace. While its passenger cars sales fell 20% last year, the brand's SUV sales shot up 12.5%. The mid-size Lexus RX has been a market leader for more than a decade. Last year, it was joined by the compact NX which saw sales increase by 25.4%.

The BMW 3-Series, long-held as the gold standard for compact sports sedans, saw its sales crater this year - down 25.5%. The 4-Series fell 22.2% while 5-Series sales shrunk 26.6%. Even though BMW's X1 and X3 crossovers saw a solid uptick in sales, they could not make up for the losses in the passenger car segment of its lineup. As a result, BMW sales fell 9.5% from 346,023 vehicles to 313,174.

Of the Tier 1 brands, Audi actually saw overall growth. VW's Group's luxury division was buoyed by strong growth from the A4 sedan along with the Q3 and Q7 crossover SUVS.

However, Audi is the junior member of the club. But over the past 15 years, the carmaker has stormed back to prominence in the US market after a scandal derailed the brand's growth during late 1980s.

As Audi continues to grow year-over-year, the Ingolstadt-based brand will likely continue to close ground on the three stalwart Tier 1 brands. That could mean that BMW, Mercedes, and Lexus won't have the annual sales battle all to themselves for much longer.

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