SPARTANBURG, SC – The BMW brand is an exception to generally flat sales in the luxury-car segment this year, says Tom Purves, chairman and CEO of BMW U.S. Holding Corp.

“We’re 3% ahead of the 270,000 units we sold last year,” Purves reveals at a press preview here for the second-generation X5 cross/utility vehicle, which goes on sale in the U.S. next month.

A nationwide slowdown in real estate values may be a factor in soft luxury-vehicle sales, he says, noting, “the luxury-car market is more linked to property values than the stock market.”

Despite a lackluster economy, Purves says a 3%-4% increase in BMW’s 2006 sales would not be “unreasonable.”

Luxury auto makers with the latest products will be the most successful, he says, pointing to the ’07 X5 as a reason BMW is staying ahead of the competition.

Additionally, BMW will introduce the 1-Series in the U.S. within two years. “It will be a very exciting car,” Purves predicts, insisting the small, entry-level model will not lower BMW’s exclusivity ratings.

“I don’t see any problems with 7-Series customers mixing with 1-Series buyers in the showroom,” he says. BMW buyers aren’t snobs, he insists.

The BMW chief says the auto maker generally has a 30-day supply of vehicles in inventory, with the ’06 X5 the only exception. “We have a couple of months supply on a worldwide basis because the new model doesn’t go on sale (overseas) until next year.”

BMW will sell 65,000 CUVs this year, but Purves says the auto maker has no plans to offer truck-based SUVs, as Toyota Motor Corp.’s Lexus luxury division does. “We couldn’t deliver what people expect from a BMW if we went to Land Rover size,” he says.

Instead, the auto maker will produce a new product based on the X5 platform at its Spartanburg plant in the near future. While he declines to provide details, Purves says the new model will not be an extended-wheelbase X5 that would be a competitive entry to the Mercedes R-Class.

“We don’t understand R-Class territory,” he says.

“Volume doesn’t worry me,” Purves says when asked whether BMW can overtake Lexus in sales. “The day we lose our excellence worries me, not selling more cars. Plus, he says, BMW “massively” outsells Lexus worldwide.

He adds BMW will offer four years of free bumper-to-bumper service on the new X5, as it does with the rest of the vehicles in its portfolio. “Our brand is a function of all the things that play into our exclusivity,” he says. “Delivering free service plays into this.”

Another positive experience BMW delivers to its customers is the high residual values of its products, Purves says, noting he expects the residual value of the ’07 X5 to be just as that of the predecessor model.