Although Lexus, the luxury division of Japanese automaker Toyota, has enjoyed ten years of domination in the U.S. luxury market, a wave of recalls and an increase in quality from Mercedes-Benz means there may be a new king of the luxury market by the end of the year.

Bloomberg reports that Lexus may lose its crown when all is said and done in 2010, as the continued bad press from the recalls by Lexus and Toyota have dissuaded discerning drivers from making purchases with Lexus. Instead, drivers are turning to German luxury automakers like Mercedes, BMW and Audi, for their luxury car needs.

Mercedes very nearly took the title of top seller during the first half of 2010, shipping less than 500 vehicles fewer than its Japanese rival. While the luxury industry in general is booming after the recession depressed 2009, Lexus’ recovery has been marred by quality concerns. The Japanese automaker posted a 19 percent increase in U.S. deliveries during the first half, but Mercedes grew 25 percent to close the gap.

According to Edmunds, Lexus’ 2.1 percent market share may fall to 1.98 percent by the end of the year, which would be enough to allow both Mercedes-Benz and BMW to surpass the brand as America’s favorite luxury vehicles.

Those shopping on a budget don’t need to price themselves out of a luxury vehicle. By shopping for used cars, driver can easily get a used Mercedes or BMW for a fraction of their sticker price.

http://www.bloomberg.com/news/2010-07-22/lexus-recalls-risk-ceding-brand-s-decade-long-u-s-dominance-to-mercedes.html