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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 even getting into smaller outfits, like Aston Martin.
Bridging the Gap
One thing people do expect from luxury is the latest and greatest, and that’s another area where automakers are currently suffering. Manufacturers just ate billions of dollars in sunk costs in the EV development whiplash from the last two U.S. presidential administrations. Spending a fat stack of cash to re-engineer a small number of luxury-market entries is not a cost-effective move when you’re pinching pennies.
Consequently, those models are rapidly aging out of their moments in the spotlight without replacements in the pipeline. Manufacturers often counter “model fatigue” with special editions, but how many ways can you skin a single nameplate before customers grow tired of it and want something new?
According to our tipster, at least, we’ve already passed that point. And with the attention-deficit demographic quickly becoming America’s economic engine, demand for the new and novel is only becoming more pronounced. And to hear our tipster tell it, we’re not merely on the brink of seeing this bubble pop. It has already started deflating.
His proof? Look at the sales numbers, and then look again.
A Shell Game
“It’s all smoke and mirrors; morale is way down at the manufacturers and at their dealerships,” he told us.
What appears concerning on the surface is merely the tip of the iceberg, he says. Dealers aren’t just struggling to move cars; they’re resorting to desperate tactics to clock sales in a market where customers simply aren’t showing up.
Have you been given a particularly swanky service loaner lately? Or perhaps enticed with a particularly long take-it-home style test drive? Those cars may have been “punched” by dealers—a practice many have widely assumed to be commonplace in challenging sales environments, but few openly acknowledge.
“Any halfway decent retail sales months are due to dealers being forced to ‘punch’ cars, the act of placing cars into their demo fleet, so these cars are ‘retailed,’ but they are not vehicles delivered to customers.”
In other words, dealers are selling these cars to themselves just to record a sale. They’re essentially milked for their depreciation and then sold off as pre-owned (likely with a hefty surcharge for “certification”) before they get too dinged up to be presentable.
But even these tricks aren’t enough to keep the numbers where manufacturers want them. And according to multiple sources we’ve spoken to, frustration is mounting on both sides. If the ship is already taking on water, what’s to prevent it from sinking?
Do you work in luxury sales? We’d appreciate your insight. Reach out to us at tips@thedrive.com or contact the author directly at byron@thedrive.com.
Byron is an editor at The Drive with a keen eye for infrastructure, sales and regulatory stories.
