Say what you will about the auto makers, but they never seem to be running low on drama.

The auto industry has spent the last two years struggling to hold its ground amid a flood of controversial recalls, rebates, bailouts and bankruptcies. At the height of the industry’s woes, both General Motors and Chrysler filed for bankruptcy protection, thousands of dealerships had been asked to shut down and auto makers saw sales sputter to a halt.

But the tune of the industry’s drama has changed in recent months. Excitement over GM’s upcoming $13 billion initial public offering and the addition of new players in the electric-vehicle market have helped the auto industry shed some of its malaise, as has a strengthening in sales – particularly in the luxury auto category.

“I think we’re in kind of a transition period; we still don’t know the end of the story” says Karl Brauer, senior analyst and editor-at-large for “September and October were both relatively strong months, but we don’t know if that’s an ongoing, unending trend or if it’s a fluke or a combination of other factors that aren’t really sustainable.”

The apparent rebound in the luxury auto market is both encouraging and surprising. General Motors – arguably the most embattled of all of the auto makers – posted a 15% rise in sales in its Cadillac division for the month of October, notching its ninth straight month of increases. Cadillac sales are up 40.9% this year, with about 34,000 more vehicles having been sold from January to October than during the same period last year, according to data compiled by Even more impressive is that sales of the Cadillac SRX model have surged 106% over the same period.

Cadillac is hardly the only line experiencing a bit of a renaissance: Nissan’s Infiniti, Honda’s Acura and Volkswagen’s Audi brands have also posted substantial increases year to date, coming in at 26.3%, 24.4% and 24.2%, respectively, according to Edmunds.

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Whether or not double-digit growth in the luxury segment will continue is yet to be seen, but the factors driving the growth are interesting enough to examine.

Brauer says the improvement in the luxury vehicle market may be a result of two slightly different shifts in consumer confidence. He argues that many consumers are “functionally” more willing and able to spend on a luxury car – whereas, at the peak of the economic crisis, they had buckled down on spending and were opting for moderately-priced and used vehicles. He also believes that those who could have always afforded a luxury vehicle, but didn’t want to be viewed as being insensitive about the downward economy, may also be returning to the market.

Another factor fueling the luxury market is the rising spending power of buyers in China. Just last week, Audi reported an 18% increase in car sales in China, BMW raised its profit-margin outlook citing booming growth in its China market, and General Motors became the first global auto maker to sell two million vehicles in China in a single year.

The growing affluence of China’s buyers – especially its younger buyers – is certainly on luxury auto makers’ radar. Brauer says he was recently at a Mercedes-Benz conference where one of the executives revealed that the average age of an S-Class hybrid buyer in the U.S. was somewhere in the 50s or 60s, while in China, the average buyer age was half that.

“The U.S. has a certain amount of established people weathering this storm, but China is going through massive growth,” says Brauer. “There’s an entirely different profile of who’s generating the wealth, there versus here.”

Lexus, Mercedes-Benz and BMW, are all vying to be named the U.S.’s no. 1 luxury car brand. Despite having been embroiled in a number of recalls, Lexus posted an 8.1% increase in October (Toyota sales as a whole slid 4.4% for the month) and succeeded in outselling its German competitors for the first time since May. 

As it stands now, Lexus holds the lead in the race to the top, but only by a tiny margin: Lexus has sold approximately 182,647 vehicles from January to October, while Mercedes-Benz has sold 182,088, according to Edmunds. BMW trails them – but only slightly – with sales of 176,578 year to date.

It’s been an interesting time for the luxury auto makers. 

Let’s just hope the drama stays positive.