Lexus is poised to lose its lead in the U.S. for the first time in more than a decade, with BMW and Mercedes-Benz snaring customers just as the Toyota Motor Corp. luxury brand struggles to recover from the Japanese earthquake.

Lexus has trailed Bayerische Motoren Werke AG and Daimler AG’s Mercedes for four straight months after clinging to last year’s lead by 9,216 cars. The drop for Lexus, which makes all but one model in Japan, has intensified since the earthquake disrupted supplies, temporarily reducing production by 50 percent, reported Bloomberg.

BMW and Daimler are adding models in the U.S., increasing local production and offering higher incentives than Lexus to boost sales and hedge against overexposure to booming demand in China. The earthquake has added to Toyota City, Japan-based Lexus’s woes after record recalls last year tainted its image. BMW’s U.S. deliveries through April rose to 71,417 vehicles, leading Mercedes’ 71,388 and Lexus’s 64,932.

“The house was on fire at Lexus before the earthquake hit,” said Eric Noble, president of The Car Lab, an industry research company in California. “If the current situation wakes them up to that, then some good may come from it.”

BMW, the world’s largest luxury-car maker, aims to grab market share this year backed by the overhauled X3 SUV, which is 3 inches longer and 1 inch wider to appeal more to U.S. drivers. The Munich-based company has a four-month order backlog, forcing some customers to wait as long as half a year for the $36,750 SUV, Chief Executive Officer Norbert Reithofer said May 4.

The manufacturer moved X3 assembly to the U.S. from Austria last year as part of a $750 million expansion of its factory in South Carolina aimed at better capitalizing on the U.S. market. The maker of BMW, Mini and Roll-Royce cars is considering adding another model at the plant, which also makes the X5 and X6 SUVs.

“We are really working all out,” Reithofer said. BMW’s U.S. factory boosted capacity by 20,000 vehicles to 260,000 to meet the higher SUV demand.

Mercedes, the world’s second-biggest luxury-car seller, may be best positioned to overtake Lexus, thanks to the updated C- Class, presented in Detroit in January, its best-selling model.

The company, which advertised at the Super Bowl for the first time this year, is spending $290 million to upgrade its factory in Alabama, where it will start building a revamped M- Class SUV later in 2011. Mercedes already rolled out overhauled versions of the CLS coupe and SLK roadster this year.

Mercedes will likely sell 254,100 cars and SUVs in 2011, edging out BMW’s 250,400 deliveries, for first place in the U.S. sales race, according to forecaster IHS. Lexus is projected to drop to third with sales of 192,900 vehicles.

“Lexus is in a sort of lull in their product cadence,” said Bill Visnic, an analyst with Santa Monica, California-based auto website Edmunds.com. The $46,100 Lexus GS sedan, which competes with the BMW 5-Series and Mercedes E-Class, “is aging and doesn’t hold a candle to what BMW and Mercedes are doing.”

Lexus generally earns less per vehicle than BMW and Mercedes, with the company’s cars and sport-utility vehicles selling for an average of $42,485, according to Edmunds.com. That compares with $48,179 on average for BMWs and $52,695 for Mercedes-Benz, based on Edmunds data, as both brands have a broader line of sedans with V-8 or larger engines. The average new vehicle in the U.S. costs $27,476.

The higher average selling price give German luxury marques more room to provide greater incentives. Mercedes currently spends an average of $3,625 on deals such as cheap leases and generous trade-in terms, followed closely by BMW’s $3,275, while Lexus spent just $1,879, according to research firm Autodata Corp, based in Woodcliff Lake, New Jersey.

Lexus began losing more ground last year in the U.S., the world’s largest market for luxury cars, against German rivals as Toyota recalled more than 10 million vehicles globally for problems related to accelerator pedal interference, including Lexus models. The Toyota unit, which has beaten BMW and Mercedes in the U.S. since 2000, saw its lead over BMW last year slump 52 percent to 9,216 vehicles.

The recalls led to a “softening” in luxury buyers’ interest in Lexus, said Alexander Edwards, president of Strategic Vision, a San Diego-based consumer research company that surveys 300,000 people a year for its automotive studies.

“For people who were sitting on the fence about Lexus, we saw them remove the brand from the shopping list,” Edwards said.

Lexus, created by Toyota in 1989 to win over U.S. luxury auto buyers, held test drives of its inaugural model, the LS sedan, in Cologne, Germany, in May 1989 to emphasize its goal of competing directly with the European brands that dominated the luxury segment.

The brand achieved its target in the U.S., combining cars famed for reliability and dealers that provided a level of service customers were unaccustomed to. In 2000, 11 years after its creation, Lexus surpassed its German rivals to become the top-selling U.S. luxury marque, a position it held until the end of last year.

The U.S. market is particularly important for Lexus because the brand has struggled to catch on elsewhere. The carmaker’s market share in Europe thus far in 2011 is 0.2 percent. In China, Lexus sold just 49,000 cars last year, trailing market leader Audi’s sales of 236,000 vehicles. Volkswagen AG’s Audi, Mercedes and BMW all delivered more than 1 million cars last year globally. Lexus sold 410,000.

Lexus isn’t sitting still. The company aims to boost its appeal with designs that are “more passionate,” Mark Templin, the brand’s U.S. chief, said April 18 in New York.

Working in Lexus’s favor is a loyal following of drivers won over by the company’s customer service, the first to include amenities such as cappuccino machines in dealer showrooms, complimentary loaner cars, home visits by salesmen, and airport shuttles for busy executives dropping off cars for service.

“There are going to be customers who will wait for Lexus models to become available,” said Jim Hall, principal of 2953 Analytics, a consulting firm in Birmingham, Michigan. Whether Lexus can then win back wayward drivers “depends on how well BMW and Mercedes take care of them. They’re going to have to work for it. 2012 is probably going to be a dogfight.”

Mercedes and BMW are aiming to keep the customers they gain. The two are improving their Manhattan showrooms, with Mercedes opening a new dealership this month on 11th Avenue with soaring ceilings and changing light colors. Three blocks away, on 57th Street, BMW is spending money at its dealership to free up floor space and renovate the facade.

Closing on all three leaders is Audi, which will add further pressure on Lexus’s GS when the new A6 sedan goes on sale this summer. The VW unit, already the leader in Europe and China, is counting on further U.S. growth to help achieve a goal of leapfrogging BMW and Mercedes-Benz to become the world’s top premium seller by 2015.

Audi projects double-digit growth in U.S. deliveries in 2011 after selling more than 100,000 cars and SUVs last year for the first time. In addition to the A6, Audi will start selling the A7 coupe and the TT RS sports-car in the U.S. this year.

“The most interesting change hasn’t been with those three, but with Audi,” Edwards with Strategic Vision said. “Audi has seen very strong movement forward, capturing some aspirational interest among Gen-Y buyers, the younger consumer group that everyone wants to attract.”

Bayerische Motoren Werke AG’s namesake brand outsold Daimler AG’s Mercedes-Benz in April to be the month’s top-selling luxury brand in the U.S. and to take the lead for the year by just 29 vehicles.

BMW’s U.S. deliveries, boosted by sales of the new 5 Series sedan and X3 sport-utility vehicle, rose 8.9 percent to 18,801 compared to the same month last year, the Munich-based automaker said. Deliveries for the first four months of the year rose to 71,417 vehicles, to lead Mercedes’ 71,388 sales and the 64,932 deliveries by Toyota Motor Corp.’s Lexus, reported The Detroit News.

“It’s going to be more or less the same for the rest of the year, a horse race,” said Jesse Toprak, an industry analyst with TrueCar.com, a website that tracks auto sales trends. “It’s going to be a photo finish.”

Lexus has been the top-selling luxury auto brand in the U.S. on an annual basis for the past 11 years. Its lead over BMW narrowed to 9,216 last year, less than half the 19,473 gap in 2009. Mercedes finished in third place last year.

Mark Templin, head of U.S. Lexus sales, last month said the brand doesn’t expect to retain its volume lead in the U.S. this year because of supply disruptions following the March 11 earthquake. All but one Lexus model is made only in Japan.

U.S. sales of BMW’s 5 Series rose 77 percent last month and the X3 more than tripled its deliveries, the company said.

U.S. dealers sold 18,042 Mercedes-Benz cars and SUVs last month, 2.3 percent more than a year earlier, Daimler said.

Lexus sales last month slipped 4.3 percent to 17,576, the company said. While Lexus has stumbled, German luxury makers also are benefiting from improved credit markets that make it less expensive to offer low lease payments, Toprak said.

Ernst Lieb, head of Mercedes’ U.S. unit, said the race to be the year’s top-selling luxury carmaker in the U.S. isn’t his sole mission.

“My instructions are to find a balance between market share and profitability,” Lieb said in an interview last month at the New York auto show.

BMW’s goal is to be the No. 1 German brand, said Jim O’Donnell, head of the company’s U.S. sales operations.

“We’ve got more new product coming,” he said at the New York show. “I think we will outsell them this year.”

Among the American carmakers, sales for GM’s Cadillac luxury division rose 16 percent to 13,127 last month, as CTS sales rose 29 percent aided by the new coupe version.

Ford Motor Co. sold 7,236 Lincoln luxury vehicles in April, 43 fewer than a year earlier, according to a statement from the Dearborn-based automaker.

Industrywide U.S. auto sales may have exceeded a 13 million vehicle seasonally adjusted annual pace for the third straight month.

Toyota Motor Corp.’s Lexus outsold Bayerische Motoren Werke AG’s BMW and Daimler AG’s Mercedes-Benz last month, helping the Japanese brand secure the top spot in U.S. luxury auto sales for the 11th straight year.

Lexus sold 27,560 cars and sport-utility vehicles in December in the U.S. and 229,329 for 2010, the Toyota City, Japan-based automaker said yesterday in a statement. The brand’s sales fell 3.5 percent in December from a year earlier while rising 6.2 percent for all of 2010, reported Bloomberg.

The Lexus annual lead over BMW shrank to 9,216, less than half the 19,473 gap in 2009. Mercedes’s U.S. sales increased 14 percent last year, leaving the Stuttgart, Germany-based automaker’s brand in third.

“It was a bit of a roller coaster” for Lexus last year, said Jesse Toprak, an analyst at TrueCar.com, a website that tracks auto sales. “They certainly got impacted negatively by the lingering recall news for Toyota, and we’ve also seen BMW and Benz being more aggressive when it came to incentive spending and marketing.”

Among other luxury brands, General Motors Co.’s Cadillac boosted deliveries 35 percent for the year, while the Audi brand of Wolfsburg, Germany-based Volkswagen AG sold more than 100,000 vehicles in the U.S. for the first time.

“The availability of credit and the availability of leasing mechanisms have certainly helped the entire industry,” Kurt McNeil, Detroit-based GM’s vice president of sales for Cadillac, said in an interview.

Large Sedans

Demand for large luxury sedans rebounded in 2010, Johan de Nysschen, president of Audi of America Inc., said in a telephone interview.

“We knew that during 2009, when that segment contracted so sharply, that the people who buy those cars still had the money to do so,” de Nysschen said. “It was just not seen as the right thing to do in the social dynamic that was experiencing harsh economic times.”

BMW’s U.S. sales rose 16 percent to 23,280 for December and 12 percent to 220,113 for the year, according to a statement from the Munich-based automaker. Mercedes reported U.S. sales of 20,090 last month, up 0.3 percent, and 216,448 for the year.

The results exclude Daimler’s Sprinter vans and Smart cars and BMW’s Mini brand, which aren’t luxury vehicles.

Mercedes had moved within about 2,700 sales of Lexus after the third quarter, a period in which it outsold BMW.

‘Aggressive Lease Deals’

Mercedes had “very aggressive lease deals,” including about $300 a month for a C-Class sedan, Toprak said.

“It basically brought in all of these consumers who otherwise didn’t even think about leasing a Benz,” he said.

Lexus more than doubled incentive spending in the fourth quarter from a year earlier, while Mercedes reduced such expenses 6.4 percent and BMW’s fell 37 percent, according to Santa Monica, California-based TrueCar.

Lexus’s incentive increase last month was at a rate comparable to previous years in December, when it holds its main clearance sale, Mark Templin, Toyota’s U.S. group vice president for the brand, said on a conference call.

“It was never our goal to be No. 1, but we’re proud to be there,” he said.

BMW’s fourth-quarter sales benefited from the arrival of the all-wheel-drive 5 Series sedan, Jim O’Donnell, head of the automaker’s U.S. unit, said in a telephone interview. The December gain for the redesigned 5 Series was 29 percent.

‘Two-Horse Race’

BMW now has the revamped X3 sport-utility vehicle reaching showrooms, which with the new 6 Series and a full lineup for the 5 Series gives the automaker a shot at overtaking Lexus in 2011, O’Donnell said.

“It will be a two-horse race this year and it will be between Lexus and ourselves,” he said. Mercedes “missed a big opportunity” in not passing BMW in 2010 “given the product cycle,” O’Donnell said.

Audi sales climbed 23 percent to 101,629 vehicles for the year and 17 percent to 10,546 in December, de Nysschen said. Porsche SE, the Stuttgart-based automaker merging with Volkswagen, said its U.S. sales increased 21 percent to 2,567 in December and 29 percent to 25,320 for the year.

GM’s Cadillac reported a 13 percent gain to 16,718 last month, for annual sales of 146,925. The full-year growth came at the expense of Lexus, particularly the Toyota brand’s RX SUV, McNeil said. Sales of Cadillac’s SRX more than doubled in 2010.

“SRX continues to even exceed our expectations,” he said. “We had our best month ever in the month of December for SRX.”

Lincoln, Acura

Ford Motor Co., based in Dearborn, Michigan, sold 8,060 Lincoln luxury vehicles in December, a 23 percent drop from a year earlier. For the year, Lincoln sales rose 3.6 percent to 85,828.

Honda Motor Co., based in Tokyo, reported Acura-brand sales of 15,489 for December, a 46 percent increase, and 133,606 for the year, up 26 percent.

Deliveries of Nissan Motor Co.’s Infiniti line rose 37 percent to 12,502 vehicles in December and 28 percent to 103,411 for the year, according to a statement from the Yokohama, Japan-based company.

Tata Motors Ltd., based in Mumbai, reported gains for Land Rover deliveries of 2.8 percent to 3,695 for last month and 21 percent to 31,864 vehicles for the year. Sales for its Jaguar brand fell 5.2 percent to 1,180 in December and rose 12 percent to 13,340 for all of 2010.

BERLIN - BMW AG secured funds from the U.S. Federal Reserve during the financial crisis to boost liquidity as other sources dried up, reported Bloomberg.

BMW’s largest transaction under the Fed’s Commercial Paper Funding Facility was for $3.62 billion on Jan. 30, 2009, according to data released yesterday. BMW made “intermittent” use of the Fed program for refinancing at a time when other forms of credit were frozen, Mathias Schmidt, a spokesman for the Munich-based automaker, said today.

“We tapped into this program in 2008 and 2009 during the financial crisis like other companies,” said Schmidt. “It supported our financial profile and offered us an additional funding source, especially at times when the money markets and capital markets did not function properly and efficiently.”

The maker of BMW, Mini, and Rolls-Royce autos spent $750 million to expand its factory in South Carolina to assemble the X3 medium SUV. The plant, which also makes the X5 and X6 SUVs, exports vehicles to more than 120 countries, including Germany and China. Last year, the U.S. was BMW’s second-largest market after Germany, accounting for 19 percent of deliveries.

“The BMW Group weathered the economic and financial crisis very successfully,” and even generated positive free cash flow in 2009, “when most other auto companies suffered a lot,” said Schmidt. “The diversified and international treasury operations helped to deal with these challenges.”

BMW recorded an adjusted free cash flow of nearly 1.5 billion euros ($2 billion) last year, as net income declined to 204 million euros, its lowest profit in a decade.

BMW AG is recalling as many as 12,400 new 5-Series sedans in the United States and China to fix their fuel-level sensors, Bloomberg reported.

The automaker is recalling 6,400 cars in the United States and 5,000 to 6,000 vehicles in China, spokesman Frank Strebe said. Replacing a part of the fuel tank sensor will take about half a day, he said.

A flaw means that the fuel sensor can become wedged against the tank, according to the National Highway Traffic and Safety Administration. The fuel gauge in the instrument cluster would then display a higher amount of fuel than was present, increasing the likelihood of stalling as drivers inadvertently run out of gas, the agency said.

The new 5-Series, which abandoned the flared headlights and small kidney-shaped grill of the previous version, starts at $44,550 in the U.S. market. The model went on sale in Europe in late March and in the U.S. in June. Sales Chief Ian Robertson said in a June 23 interview that the model had sold out, forcing clients to wait as long as four months for deliveries.

Demand for the revamped 5-Series, which competes with Mercedes’s E-Class and Toyota Motor Corp.’s Lexus GS, prompted Munich-based BMW earlier this month to raise its 2010 sales and earnings forecast.

BMW’s Strebe said that there had been 10 reported incidents in the U.S. as a consequence of the defect. The affected vehicles were manufactured from Jan. 12 through July 1, 2010, according to the NHTSA.