Once envied for generating the industry's highest profit margins per car, the world's top three makers of luxury cars are facing a sea change triggered by imploding demand amid a broader trend toward smaller, less-profitable vehicles.

Analysts say they don't expect the record earnings reaped in recent years by BMW AG, Daimler AG's Mercedes-Benz division and Volkswagen AG's Audi unit to return anytime soon.

Sanford Bernstein analyst Max Warburton says the vast majority of profits in recent years have come from high-powered cars bought in the U.S. and the U.K. as well as newly wealthy customers in oil-producing countries. "One could argue these consumers — at least the Americans and Brits — are going to have their spending power constrained for a long time," he says.

Even though the three German car makers appear to have more muscle to steer through the current industry gloom than most of their rivals, thanks mainly to higher cash reserves and relatively low debt levels, coming quarters are set to be bumpy.

Auto makers around the globe have been hit hard as major markets deteriorated in the second half.

"All of the luxury producers are likely to cancel product-development programs, cut capital spending, cut marketing spend and ultimately cut head count. But when your top line is down 25% to 30% these measures will not restore the business to profitability," Mr. Warburton says, "Losses will be substantial."

BMW, the world's biggest seller of premium cars, posted a 22% drop in global sales last month at its core brand to 60,248 vehicles. The world's No. 2 luxury-car maker, Mercedes-Benz, saw sales come in at 53,900 cars, down 35% from a year earlier. Audi reported that sales fell 29% to around 56,200 cars.

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