DETROIT – More Americans are buying cars that say "look at me."
Luxury vehicles like Audis and Volvos drove off dealer lots at a furious pace in July and, combined with sizzling demand for SUVs, helped the auto industry roll on toward its best annual sales since before the recession. July sales rose 5 percent to more than 1.5 million, according to Autodata Corp.
Subaru reported the biggest sales gain of 10.5 percent over last July. General Motors, Fiat Chrysler and Hyundai all saw 6 percent sales increases, while Honda and Nissan recorded 8 percent gains. Ford's U.S. sales rose 5 percent. Volkswagen sales were up 2 percent. Toyota's sales were flat, hurt by a big dip in car sales.
The high demand for big, pricey vehicles is defying recession-era predictions that Americans would downsize and stop flaunting their wealth. Luxury sales were up 10 percent in the first six months of this year; in the same time period, mass-market vehicle sales rose just 3 percent, according to car shopping site TrueCar.com.
The surge in SUV sales is due in part to relatively low gas prices, which ended July at around $2.70 per gallon nationwide. Sales of Nissan's new Rogue SUV jumped 51 percent in July, while sales of GM's Buick Encore jumped 68 percent.
Summer discounts to clear out 2015 models also lured buyers. Sales of midsize sedans have been struggling as Americans pass them over for small SUVs, so automakers enticed buyers with zero-percent financing deals on the Toyota Camry, Ford Fusion, Nissan Altima and other sedans. It worked. Altima sales rose 27 percent and set a new July record.
Another big motivator: status. Luxury brands made up 11.5 percent of vehicles purchased so far this year, up from 10.2 percent three years ago, according to TrueCar.
Audi saw its best July ever in the U.S., with sales up 21 percent to more than 17,500 cars and SUVs. Lincoln's sales jumped 21 percent; the brand sold 785 Lincoln Navigator SUVs, or 25 per day, at more than $62,000 apiece. Acura and Infiniti sales both climbed 20 percent. Volvo's sales were up 15 percent.
Luxury brand sales have been growing faster than mass-market ones since 2013, but the pace is accelerating for several reasons, said Larry Dominique, TrueCar's executive vice president.
Luxury automakers are adding more models at lower prices, which is attracting new buyers. Mercedes' CLA sedan, introduced in 2013, starts at $31,500, while Lexus has a new small SUV, the NX, that starts at $34,480. That's within reach of younger buyers. Dominique said millennials are now leasing luxury cars at a higher rate than other generations.
Dominique said that before the recession, when housing values were high, the industry believed luxury sales were inflated because people were borrowing against their home values. But that wasn't the case. After the recession, luxury sales took off even before home values had recovered.
"People who buy luxury want luxury. It's a cultural phenomenon," Dominique said.