RESOLVING THE LEDGER
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If you’re a regular reader of The Drive , you’ve probably noticed that we sign off our stories with a note that we’re always seeking news tips. Sure, it results in lots of pitches for quirky air fresheners and AI shovelware, but occasionally we get a doozy. Want to get the attention of the editorial team? Try an opener like this one:
“I’m curious why I haven’t seen any articles on the crash of the ultra-luxury market.”
That’s a big statement, and it raised our eyebrows for two reasons. First, it came attached to a big name—one that we’re not going to share with you because we guaranteed anonymity in exchange for their insights, which were plentiful. Here’s another taste.
“Lamborghini—not selling,” he elaborated. “Bentley—struggling since 2024. Aston Martin—clients love their Valhallas , but other than that, sales are poor.”
And on top of that, he offered up the “why.”
What Gives?
“People don’t see the value anymore as prices have risen for all these brands. Clients complain on lease payments—many would need to pay an additional $2,000 a month to upgrade to a new vehicle, which is basically the same car as their current car,” he said.
The result is the erosion of the market from the middle out. So far, the traditional “S-tier” brands (Ferrari, Bugatti, et al.) are immune to the effect. At that level, market trends are almost entirely irrelevant—most of them, anyway—but even buyers with money to burn aren’t in a big hurry to spend it right now.
“And depreciation is crazy,” he said. “Clients may have money, but they aren’t stupid.”
If the trend is impacting those wealthy enough to otherwise ignore it, it naturally follows that the pinch is being felt up and down the sales spectrum. That brings us to the second reason why our tipster’s email caught our attention: He’s not the only one sounding the alarm. Kelley Blue Book reached out the same week with insights into July’s sales numbers, and the underlying trends were staring us right in the face.
Price Pressures
Ever since COVID, prices have been rising near-universally. Up until recently, customers were simply sucking up the price hikes because they had no choice. But at some point, likely in the past year, we quietly hit an inflection point. Now, when faced with both higher sticker prices and spikes in fuel costs, customers are simply pivoting to smaller, more affordable alternatives.
“Consumers continued gravitating toward more affordable segments, with subcompact SUVs, compact cars and midsize cars all seeing year-over-year sales gains,” KBB’s report summary said.
Critically, KBB’s report noted that average transaction prices didn’t increase as much in July as they have recently, but that’s not because sticker prices are going down. Instead, it’s because buyers are simply refusing to be upsold. In fact, the shift has been so dramatic that demand is keeping prices high on mainstream, “affordable” models while larger, more-expensive alternatives are overlooked.
“That shift is helping keep overall price growth in check, even as four of the five best-selling segments posted ATP [average transaction price] gains well above the industry average,” the report went on.
In other words, customers are still overpaying for cars, but they’re overpaying for smaller, more-efficient models, rather than upgrading to something larger and more luxurious. The definition of “luxury” may be murky in 2026, but “small” and “more affordable” aren’t typically on the list, and that’s bad news for lux-market dealers.
As a result, automakers with greater exposure to the high end of the luxury market (Volkswagen, Mercedes-Benz) are feeling the pinch more than those whose lineups appeal more to the masses (BMW, for example). Transaction prices are still creeping up, but brands are losing sales at an unsustainable rate.
The Numbers
Just how bad is “bad?” Traditionally, the upper end of the luxury segment is where manufacturers play with thick, juicy margins that help justify corporate investment in halo models. Mercedes doesn’t need to sell 10,000 Maybach SLs every year just to break even, because they’re far more profitable than the average Benz on a per-unit basis.
But even with fat margins, luxury brands need to maintain a degree of volume. Porsche has spent the past several years bragging about its brand expansion, for example, but 2025 appears to have been an inflection point. Not only were its global sales down last year (largely blamed on a collapsing Chinese market, but Europe is doing it no favors), but the company eked out only a small gain over its 2024 performance in the United States. Given the tactics we’ll dig into below, even that result seems dubious.
Meanwhile, U.S. sales of Porsche’s certified pre-owned cars were up 11% in 2025—yet another sign that customers are bargain-hunting. According to multiple sources, many customers have also soured on Porsche’s inventory allocation system after dealers tied the availability of high-end 911 variants to purchases of less-sought-after models, such as the Taycan EV, in addition to charging exorbitant markups on each sale.
Adam Ismail
As a result, customers are closing their wallets. And Porsche isn’t alone in seeing less dealer traffic. According to our tipster, Bentley, which does not publish regular sales reports, moved fewer than 150 units in the U.S. in July.
“The current lineup is not selling, and the upcoming EV will be a disaster,” he remarked.
Things aren’t any better at Lamborghini. Profit is up (yay margin!), but volume is down. How long can the company stretch that out before things inevitably collapse? And that’s not ...
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