It’s not just the Big 3 that are feeling the pain

Luxury marks like BMW and Daimler are getting hammered by the move to smaller cars as well. Both are selling more of their smaller cars (BMW sells the 1 series and Mercedes has the Smart), but since margins are much slimmer on the smaller cars they have to sell several small cars for every one luxury car that isn’t bought. Expect as part of the smaller-is-better phenomenon to see the smaller cars become trendier and go upscale. This will provide automakers with the opportunity to carve back some of that lost margin.