DETROIT - BMW AG's namesake brand increased U.S. sales 1.6 percent in August and beat Toyota Motor Corp.'s Lexus nameplate as the top U.S. luxury brand for the third straight month, reported Bloomberg.

BMW sales rose to 19,540 as deliveries of its 1 series gained 53 percent and the 7 series climbed 42 percent. Lexus deliveries decreased 15 percent to 19,465.

“We are seeing a slowdown in the market and do not expect the second half of the year to be as strong as the first half,” Jim O'Donnell, BMW of North America president, said in a statement. “Despite this, building momentum throughout the year and narrowing the gap with our competitors is still our plan.”

Lexus was one of the few luxury brands to post a sales decline in an overall U.S. market that dropped 21 percent last month. Most of those brands had fallen in August of 2009, when the U.S. cash-for-clunkers incentives spurred sales of small, fuel-efficient cars.

Lexus had record recalls in the past year, including of its LS 460 cars and GX 460 SUVs, and is facing competition from revamped models by BMW and Daimler AG's Mercedes-Benz. BMW, which beat Lexus in June and July, has set a goal of becoming the best-selling U.S. luxury brand by 2012.

“The new product is just so important for the entire market but especially for the luxury segment where it is much more discerning between old versus new,” said Jessica Caldwell, senior analyst with Edmunds.com, a Santa Monica, Calif.- based provider of industry data.

Mercedes sales increased 15 percent to 19,682 vehicles. The gain was helped by the revamped E-Class, which rose 26 percent for the month and has gained 71 percent for the year through August.

Lexus remains the U.S. luxury sales leader for the year, with 145,490 deliveries through August, an 11 percent increase. Mercedes sales, including Sprinter vans, have gained 22 percent to 144,753, and BMW's U.S. sales increased 7.8 percent to 139,236 vehicles.