BMW ceded the lead to Mercedes-Benz in U.S. luxury car sales after a 12.5% drop in March.

This story contains corrected information.

In the rush of numbers, the auto industry released as it reported its March sales numbers, a couple of things stood out, while underscoring the new intensity in the luxury market.

BMW reported a 12.5% drop in sales and Mercedes-Benz also reported a sales drop of 5.9% and Lexus, Toyota’s luxury vehicle division, took over the leadership in the luxury segment despite watching its sales drop 2.8% last month.

Among the German high luxury brands, only Audi continued to roll forward with its 83^rd consecutive month of sales increases.

The sales slide at BMW and Mercedes-Benz did carry a warning for the rest of industry, indicating quite clearly that there actually are limits to the industry expansion that began way back in 2010 just as the recession.

After all, BMW and Mercedes-Benz have some of the strongest margins in the business and their customers are among the most affluent and credit-worthy in a business that rating agencies have begun to warn is facing challenges finding credit-worthy borrowers.

(With a few exceptions, automakers deliver another strong month. For more, Click Here.)

Mercedes-Benz took over the luxury sales lead despite a 5.9% drop in March sales.

In addition, BMW and Mercedes-Benz, thanks to relatively stable residual values on used models and also have long histories of successfully managing their lease portfolios. For example, Mercedes-Benz Certified Pre-Owned business, which is where off-lease vehicles go to find a new home, recorded sales of 9,380, up 2.4% from the 9,163 units sold the same month last year. On a year-to-date basis, MBCPO sold 29,303 vehicles, an increase of 3%.

But the numbers from March point to shifts in the luxury segment, some of which is driven by the resurgence of Volvo, Jaguar Land Rover and Infiniti all posted healthy. JLR’s sales were up 29% last month, Volvo’s climbed 16% and Infiniti’s were up 10%, according to the latest sales numbers.

“We are proud that both Jaguar and Land Rover finished our fiscal year on a high note establishing record- breaking sales numbers for Discovery Sport and XF, and with the Land Rover brand having its best month in its market history,” said Joe Eberhardt, president and CEO, Jaguar Land Rover, North America, LLC.

Eberhardt said during the New York Auto Show that JLR isn’t looking to derail the German juggernaut.  But he noted competition in the luxury segment is increasing and JLR believes it is now in a position to capture a larger.

Mercedes and BMW also are facing revived challenges from Cadillac, Lincoln and even Fiat Chrysler Automobiles, which is looking to revive the Alfa Romeo.

Sales of BMW brand vehicles decreased 12.5% in March for a total of 30,033 compared to 34,310 vehicles sold in March, 2015. Year-to-date, BMW brand is down 10% on sales of 70,613 compared to 78,492 sold in the first three months of 2015.

“It’s been a tumultuous first quarter of the year for business in the U.S. with plenty of volatility even in the premium vehicle segment,” said Ludwig Willisch, president and CEO, BMW of North America.

(Click Here for details about FCA’s possible addition of a second midsize truck.)

“We had a strong first-quarter, laying the foundation for a minimum of nine new model launches in the months ahead,” said Dietmar Exler, president and CEO of MBUSA. “We are expecting yet another record year on the strength of our product portfolio.”

Mercedes-Benz volume leaders in March included the C-Class, GLC and GLE model lines. The C-Class took the lead at 6,658, followed by the new GLC sales of 4,871. The new GLE rounded out the top three with 4,730 units sold.

Mercedes-AMG high-performance models sold 1,857 units in March, up 60.2% from last year,” he said.

Lexus, with total sales of 30,198 units, wasn’t blowing any trumpets either after releasing its March sales figures as sales dropped. But the popularity of its key crossover model, the RX350, gives it a valuable tool in the fight for luxury, which every maker claims they don’t really care about but everyone wants.

Willisch March, were strong increases in the sales of BMW Sports Activity Vehicles, in particular the BMW X1 and the BMW X3. The popular new BMW 7 Series continues its sales success, increasing by 16.1% compared with March 2015.

“The desire for premium Sports Activity Vehicles continues accelerating at a strong pace in the U.S. and I’m very pleased that our SAV plant in South Carolina will make another production increase in the months ahead to help us satisfy the ever-growing demand for our X models,” he added.

Rebecca Lindland, a senior analysts for Kelly Blue Book, suggests the competition suggests the easy money in luxury vehicles has probably vanished.

(To see more about why analysts are warning about the dangers of rising incentives, Click Here.)

“The market is forecasted for flat or minimal growth, which means automakers are scrambling to protect share and eek out increases. This could lead to some aggressive financing and incentive offers for consumers, putting them into cars they can’t afford long term, and inflated sales results that are borrowing from tomorrow, or it just means consumers are realizing they’re driving around in obsolete vehicles and they’re out shopping for an upgrade,” she said.