BMW AG’s namesake luxury brand increased U.S. sales 16 percent in July to close the gap among top-selling luxury brands with Toyota Motor Corp.’s Lexus, which was little changed amid recalls, Bloomberg reported.

BMW sales rose to 19,064, the Munich-based automaker said today. Daimler AG’s Mercedes-Benz sold 17,367 vehicles, up 7 percent from a year earlier. Lexus reported an increase of less than 1 percent to 18,595.

Revamped models such as BMW’s 5 Series sedans and Mercedes’s E-Class cars have helped the two brands gain on Lexus. The Toyota division has been hurt by the automaker’s record recalls in the past year, including Lexus models such as the LS 460 sedan and GX 460 sport-utility vehicle.

“Right when Lexus is hitting a weak spot, plenty of other cars are able to swoop in and take market share,” said Jessica Caldwell, senior analyst at Edmunds.com, a Santa Monica, Calif.-based provider of industry data. “Talk about a three-horse race — it’s really close.”

Through last month, Lexus sold 126,025 cars and light trucks, compared with 121,041 for Mercedes and 119,696 for the BMW brand.

BMW gained on Lexus for the second straight month, as it moves toward its goal of passing Lexus for top rank in U.S. luxury sales by 2012. Lexus has led since 2000, Caldwell said.

BMW sold 9.6 percent more 5 Series sedans and 51 percent more X5 SUVs in July than a year earlier.

Mercedes C-Class sales surged 19 percent for the month.

Lexus was hurt by a 9.4 percent slide in demand for its cars, while deliveries of its SUVs rose 12 percent.

TOKYO – Daimler AG’s Mercedes-Benz may take over the top position among luxury brands in the United States after a decade of dominance by Toyota Motor Corp.’s Lexus, Bloomberg reported. The Japanese carmaker has been marred by record recalls this year for flaws across its lineup.

In the first half of this year, U.S. deliveries of Lexus models grew 19 percent to 107,430, while Mercedes-Benz jumped 25 percent to 106,972. The figures do not include Mercedes’ sales of its Sprinter commercial van.

Lexus’s market share may dip to 1.98 percent this year from 2.1 percent in 2009, falling behind both Mercedes-Benz and BMG AG, according to auto-industry researcher Edmunds.com. BMW, the world’s top-selling luxury auto brand, sold 100,632 units this year through June in the U.S. market.

“It’s very likely Mercedes-Benz may take over the lead this year,” said Jesse Toprak, vice president of industry trends for researcher Truecar.com in Santa Monica, Calif. “The cumulative impact of all the recalls hasn’t really shown up yet. It’s more likely to be seen in the second half.”

Problems including fuel leaks, engines that may stall and vehicles at risk of rolling over during emergency driving maneuvers surfaced after Toyota had already recalled more than 8 million vehicles under its main brand for defects linked to unintended acceleration.

“It will be a battle,” Jim Lentz, president of Toyota’s U.S. sales unit, said in an interview in Torrance, Calif. “The Lexus customer is really discerning about quality issues.”

Jessica Caldwell, a senior analyst at Edmunds.com, said Lexus, Mercedes and BMW are “really neck and neck” in the U.S.

“There is a big opportunity there for the Germans,” she added.

Lexus’s U.S. sales growth dropped to 2.7 percent in June while Mercedes-Benz, the second-biggest premium vehicle line globally, posted a 25 percent gain and BMW delivered 15 percent more cars.