Suddenly the rich aren't getting richer - and luxury car dealers are joining other high-end retailers in feeling the pinch.
Adding to a turnabout in once-resilient upscale goods, most luxury car brands saw sales drops last month.
Mercedes-Benz softened 3.7% compared with March last year, Autodata reports. BMW fell 8.7%, and Lexus plummeted 13.6%.
Overall, luxury vehicle sales are off almost 13% this year.
Purveyors of the finer things in life are finding their well-heeled customers are caught in the same economic riptide tugging at the less well-off.
"It's a recession that has a double whammy: Your real estate is down, and your investment portfolio is down," says Milton Pedraza, CEO of the Luxury Institute. "Even the ultrawealthy are saying, 'Let me pause here and see what's going on.' "
The biggest impact is at the entry level of the high-end market - "aspirational luxury" for relative newcomers to upscale living, says Craig Johnson, president of Customer Growth Partners, a research firm.
Nearly four out of 10 consumers averaging $155,700 annual income surveyed late last year by Unity Marketing said they would be spending less in 2008 on luxury goods.
When it comes to luxury cars, buyers aren't trading down. They're holding off.
"They just want to see that the worst is over, the bottom is there and everything is going to be OK," says Mike Jackson, CEO of AutoNation, the nation's largest new-car dealership chain.
The nation's largest Mercedes dealer, Fletcher Jones Motorcars in Newport Beach, Calif., is still ahead of last year's sales pace, but customers are trying to drive tougher deals, says Garth Blumenthal, general manager.
Luxury car dealers are coping with the same chill as other high-end retailers. Though the fortunes of the most elite luxury retailers were still rising in Customer Growth Partners' first-quarter survey, up 6%, that's only half the rate of the same quarter a year ago.
The biggest impact has been on more mass-market upscale retailers, such as Nordstrom (Quote: jwn) and Neiman Marcus, than on those catering to the very rich, such as Prada, Johnson says. Neiman Marcus Group in February registered its first monthly comparable-store-sales decline since March 2003. Nordstrom sales fell 3.3% in February.
Falling housing values have affected wealthy customers most in Florida and California, Johnson says. Car dealers in those states are feeling it, but they still look for a turnaround.
"People are a little cautious right now," says Tim Smith, who runs the family-owned Bob Smith BMW in Calabasas, Calif., a Los Angeles suburb.
Sales dipped recently, but new models are coming by year's end, "And we're on everyone's shopping list."
Copyright 2008 USA TODAY, a division of Gannett Co. Inc. All Rights Reserved.