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The Honolulu Advertiser
Posted on: Sunday, January 18, 2009

Jittery rich stop buying luxury autos

By Sharon Silke Carty
USA Today

Hawaii news photo - The Honolulu Advertiser

The Maserati Quattroporte, on display at the North American International Auto Show in Detroit, can hit 60 mph in 5.1 seconds. It's yours for a mere $133,500.

FABRIZIO CONSTANTINI | Bloomberg News Service

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DETROIT — In yet another sign that the party is over, luxury carmakers say sales to the ultra-wealthy consumers they rely on are evaporating.

It's not that those folks are worried about jobs or can't get a car loan. Most still are rich enough to plunk down cash for their high-status wheels.

It's that the economic crisis has eroded their confidence and optimism. And that worries carmakers who rely on a small, rarified world of buyers for their lavish machines.

"No country in the world has been unaffected, and no matter where you put your money, you are losing," says Raffaele Fusilli, Maserati's commercial director.

"In any case, we do not want to enter into a pessimistic club. ... We are quite confident that the American economy" will lead the rest of the world in a recovery.

It's a change from past recessions in which luxury car sales held steady or fell a little, and generally stayed healthy.

In the fourth quarter, when the banking crisis really hit, luxury sales were off 34.2 percent (versus 31 percent for the broader passenger car market), according to IHS Global Insight.

"People have stopped buying cars. It's not a unique phenomenon to the luxury market. It's a general trend," says Aaron Bragman, an analyst at IHS. "We're looking at a situation where just about everyone is tightening their belt. Trying to find buyers in the luxury market is just as difficult as finding a customer in any other market."

That has executives at Bentley Motors hesitating to say where they think sales will go this year.

"The changes in the market don't follow any trend we can recognize," says Stuart McCullough, Bentley's board member for sales and marketing.

"This is not like any other recession we've lived through. It's been more severe and more sudden. ... There was a certain amount of shock in the last quarter and year."

The best way to offset a slow market is with new products, he says, because high-end consumers often are tempted to buy the newest thing on the road.

"New models will drive the recovery, that's a certain," McCullough says.

"It will get people coming back into the showrooms. At the top end of the market, it's very much ... people who want to have the latest and greatest and newest."

Luxury carmakers have plenty of those on hand at the North American International Auto Show in Detroit, which opened to the public yesterday and goes to Jan. 25:

  • Bentley Continental GTC Speed, a faster, convertible version of its Continental GT Speed. The $231,400 two-seater, due in June, goes from 0 to 60 mph in 4.5 seconds. It has a 600-horsepower W-12 engine that Bentley says is more efficient because of lighter materials.

    A biofuel version will come out later in the year.

  • Maserati Quattroporte GT S., a sports car that has 433 horsepower, costs $133,500 and goes 0 to 60 mph in 5.1 seconds.

    Fusilli says the Quattroporte, on sale now, fits these economic times because the design is sleek and conservative.

  • Jaguar XFR, coming this summer, with a 5-liter, 510-horsepower supercharged V-8 which hit 225.675 mph on the Bonneville Salt Flats in Utah.

    Jaguar has not set a price.

  • Fisker Karma, a plug-in 201-horsepower sports car ($87,900) that runs 50 miles on a single charge and goes into production this year.