The rich are affected: Luxury car sales declining
Luxury car sales are off by at least one-third compared to last year's numbers, and the end is probably not in sight. In past recessions, the wealthy have been insulated by their money, but not this time. Real estate and banking are responsible for a large amount of the financial pickle we're in, and as those sectors get walloped by reality, the luxury cars typically purchased by agents, brokers, and bankers are languishing.
Those that haven't lost their shirts are also either holding on to what they've got for now, or buying something less ostentatious. While you might miss out on a certain brand cachet by trading a Mercedes for a Prius, it's a different kind of status symbol, just the same. Besides, why bother paying so much for a premium car when a loaded "normal" vehicle can be had with features that were once the exclusive realm of luxury cars? A desire to be less flashy, a newfound concern about the environment, and a beat-down portfolio have converged to generate the perfect financial storm, killing momentum for luxury car sales. Things might turn around a bit as environmentally conscious premium cars become available. There are the new diesels, and Lexus will have its own dedicated hybrid when the HS250h goes on sale this fall. Before any of that happens, however, current inventory will have to be cleared, so now might just be the perfect time to pick up a luxury car at a steep discount.
[Source: Detroit News, Photo: Niello Porsche]
Reader Comments (Page 1 of 2)
Auari 11:07AM (2/21/2009)
........ We have known this for quite some time.
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Mazda FTW! 11:07AM (2/21/2009)
"Besides, why bother paying so much for a premium car when a loaded "normal" vehicle can be had with features that were once the exclusive realm of luxury cars?"
Bingo. That's my line of thinking. I love cars but when it's time to buy one I'd just as well buy a LOADED Mazda6 for about $36K Canadian instead of a starter A4 at $38K Canadian. That 6 will have as much equipment (more, actually), almost as much power but will be cheaper to insure, repair, maintain etc.
That is ABSOLUTELY not to take anythign away from luxury brands...I lust for Porsches and S5s like any other guy...but it's all about contentment.
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mkM3 12:27PM (2/21/2009)
I was just going to reply to that same question with an opposing viewpoint.
I buy luxury cars because of the way they perform. My requirements are simple: RWD, great handling, copious amounts of power, relatively compact, seating for four (or more). The fact is that the selection of non-luxury cars with those characteristics is small. Roadsters are out or the question because they lack rear seats. The G8 and Charger are too big. This leaves a muscle cars (Mustang/Challenger/Camaro). I find the Mustang and Challenger, while great cars in their own right, don't handle the way I want. I haven't tried a Camaro yet of course. Plus, I prefer a four-door car unless I am buying a convertible, so that would really leave only the Mustang anyway. I figure that if the top does not go down, for me, there is not much compelling about the two-door.
If there were non-luxury cars that matched my needs I'd be sold, assuming the price differential from the luxury equivalent was there. If there were a RWD Fusion or Mazda6 or Aura or G6 with a 300hp+ V6 or small V8, I'd at least go test drive one.
Mazda FTW! 1:47PM (2/21/2009)
Good point. In your case, you have no choice but to spring for a premium vehicle.
akatsuki 10:47AM (2/22/2009)
@mKM3
Hyundai Genesis? Big RWD car, looks decent, good spec.
why not the LS2LS7? 11:10AM (2/21/2009)
I would think the market for cars to rich people wouldn't be affected as much by substitution (Mazdas instead of Audis), but by people just delaying purchases.
If you're a big wheel and "drive new every two" isn't it really easy to simply delay switching to a new car for a bit? Even if you only delay it only one year (keeping your car three years), it can cut down sales dramatically.
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Greg 11:21AM (2/21/2009)
Agreed.
Affalterbach 3:13PM (2/21/2009)
While you are partially true, the thing that autoblog wants to point is that people shopping in the extreme high-end category (Ferrari, Lambo, Maserati) will move to M, AMG (as evidenced by their record sales in '08 FY).
why not the LS2LS7? 3:16PM (2/21/2009)
I know that's what autoblog is saying. But I disagree.
Furthermore the huge increase in sales of BMW's M division is simply because the car that makes up over 50% of their sales (M3) wasn't in production the year before.
If you are used to replacing your car every 2 years and you have a 2-year old Gallardo right now, are you going to get a new M6 or just stick with your Gallardo. A 3 year old Gallardo is a better car (assuming it is what you wanted in the first place) than a new M6.
Affalterbach 4:15PM (2/21/2009)
^^ Even though there will be a few more factors involved, I concede.
Mike 11:22AM (2/21/2009)
While I don't have the numbers for regular cars, it seems they are down 40%, so it doesn't appear that they are taking sales away from any other demographic right now.
I'd be willing to bet that the 20something crowd of mortgage brokers are responsible for a big chunk of the lost sales of luxo cars. The free money stopped falling from the sky and the ones I know of at least, were sent crashing back to reality when they couldn't pay the bills anymore and lost everything. These bozos were apptly portrayed in the film Boiler Room, only in the movie it was garbage/fake stocks instead of garbage home loans that they were screwing the middle and lower class with.
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BigWill 11:40AM (2/21/2009)
Maybe Hyundai's timing with the Genesis wasn't that far off. I've seen loss-leader Genesis ads for $29.999 for the base model, and I'd have a *really* hard time paying thousands more for a Lexus ES or GS.
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mcampasini 12:21PM (2/21/2009)
ferrari and lamboghini both had record sales last year.
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KAIKAI 12:25PM (2/21/2009)
yeah all of em were probably bought by the same oil baron xD
Reader 12:42PM (2/21/2009)
Which just means people ordered there exotic cars at the highest point of the housing bubble, when confidence was very high.
JIm 1:47PM (2/21/2009)
Generally speaking, when discretionary money from very wealthy folks begins to flow in directions outside ultra lux vehicles, that means those folks understand we are in the midst of a downturn that is going to last a long time.
People that can afford these cars got rich (generally speaking - don't come at me with the exceptions) because they are smart, had an idea, had a plan, etc. If they are retracting it doesn't bode well for the near term future and our economic well being. This recovery is going to take awhile.
The fact people at this income level are retrenching, as is the market, after two "stimulus" bills, tells me the current government approach is not going to work. At least as far as the market is concerned and the market is a very honest economic broker.
In reading this article we need to look beyond just the fact sales are down and ask, "Why are people that can afford these vehicles not buying them?"
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Mr.Oak 3:09PM (2/21/2009)
The government's stimulus is already working, 14,000+ teachers in NYC were about to get the axe, not to mention the entire class of NYPD recruits that were about to be let go, are back on the job. Public works projects across the that were frozen are now moving again.
Those of you who use the financial markets as a gauge, good luck, it's not coming back anytime soon. I hope most of those arrogant bastards lose as much as I lost in my IRAs, 401Ks etc. To the whining assholes in the financial markets that are peed-off because the govt. didn't buy up their bad business deals. SCREW u.
More of the large financials are going to go under, good riddance. The top 10 people at the SEC should be executed by firing squad. Their negligence is the is the a major factor in the lack of confidence in the markets.
west-coaster 3:13PM (2/21/2009)
As the article mentioned, a lot of people who still have a well-paying job and/or assets don't want to show off too much.
If you're the owner or principal of a company, and you just had to lay people off or deny raises, it doesn't look too good if you roll into the parking lot in a brand new Benz or Bimmer.
Same goes for your neighborhood. Suppose you're gainfully employed and your mortgage is manageable, but your neighbors are struggling or have been foreclosed upon. Do you really want to gloat with a new ride in the driveway? Sure, some will, but I think most of us have better sense than that.
I just think people -- even those with money -- are being sensitive to the times.
why not the LS2LS7? 3:17PM (2/21/2009)
You seriously would buy a lesser car because of your neighbors?
That's really strange.
Affalterbach 5:21PM (2/21/2009)
@LS2LS7
I'm assuming that a lot of people feel guilty to be doing good in the current climate.
Or maybe modesty is in; show and glam is out.
This could have contributed a lot to Genesis sales.
After all those who buy Priuses want to say: look at me! I want to save the earth so I don't mind driving a humble Toyota appliance.