Trader Craig Poler couldn’t hold out any longer. Browsing at the Miller Motorcars dealership in Greenwich, Connecticut, he spotted the $130,000 Aston Martin Vantage Coupe he had been dreaming about for months.
“The second I saw it I knew I was going to buy it,” said Poler, 48, who trades oil and petroleum products. “I’ve wanted one for a long time, since I started seeing them in London when I went on business.”
Super-luxury cars, whose sales plunged after Lehman Brothers Inc’s collapse and the ensuing financial crisis, are making a comeback. Fiat SpA’s Maserati and Ferrari brands, Bayerische Motoren Werke AG’s Rolls-Royce and Daimler AG’s Maybach are moving out of the lots again as taboos over conspicuous consumption fade with the recovering economy.
US sales this year of cars priced at more than $100,000 may jump 42 per cent after falling 30 per cent in 2009, according to automotive industry researcher IHS Global Insight. US gross domestic product has expanded on average an annualised 3.7 per cent a quarter since the middle of last year after the biggest economic slump since the Great Depression.
Demand for the most expensive car models plummeted in the fall of 2008 after the bankruptcy of Lehman Brothers and the arrest of Bernard Madoff for a $50 billion pyramid scheme, the largest investment fraud in history, set in motion a financial crisis that prompted wealthy consumers to rein in spending.
“It was poor taste to be flashing greenbacks around,” said Rebecca Lindland, an IHS Global Insight analyst in Lexington, Massachusetts. “You don’t think of this segment as having pent-up demand, but there is. These buyers are people that need to be the first ones on the block to have the latest model.”
The US is the largest market for the most expensive luxury cars, often referred to as supercars. A rebound in stocks and bonuses has revived demand for such vehicles.
The US stock market posted its biggest gains last year since the 1930s and bank earnings soared, including record profits at Goldman Sachs Group Inc, leading to bigger bonuses. Average compensation and benefits at Goldman Sachs last year was $498,246 per person compared with $316,928 a year earlier.
Lindland estimates Rolls-Royce will increase US sales almost 20 per cent this year on demand for the new Ghost, which is 17 inches shorter and nearly 600 pounds lighter than the Phantom. The “baby” Rolls sports a 12-cylinder, 563-horsepower engine, is hand-polished for five hours before delivery and has leather from bulls raised in barbed-wire-free pastures. Other models in demand are Maserati’s GranCabrio convertible and Aston Martin’s $198,000 Rapide, analysts said.
“These are very emotional vehicles,” said Jeremy Anwyl, who runs the automotive Web site Edmunds.com. “The people who were holding back had money, but needed a good reason to buy.”
Waiting lists for Ferrari Californias and 458s are growing again, said Richard Koppelman from the Miller Motorcars dealership, explaining he’s sold out of the 458 and has a waiting list of 180 people.
“People who still have jobs are saying that things didn’t get as bad as they could have been,” Koppelman said. “Earnings are good on Wall Street. People are getting tired of doing without and are saying, ‘Why not?’ Demand is definitely strengthening a lot.”
Daimler AG, which makes the Maybach, the 1930s-era ultra- luxury brand reintroduced by the German car maker in 2002, expects premium demand to improve faster than the rest of the auto market, Chief Executive Officer Dieter Zetsche said.
The Maybach was updated this year with a new grille and a more-powerful 12-cylinder engine. The updated version also includes seats that can be adorned with Swarovski crystal and an optional perfume atomizer in the rear compartment. Maybach models, whose owners include Donald Trump and Madonna, start at $358,000. The brand delivered 200 vehicles last year.
“During the crisis, premium declined because the mood wasn’t there, while mass-market demand declined because money wasn’t there,” Zetsche said in an interview. “Mood is something that can change faster, and this has certainly proven to be the case.”
The new Mercedes-Benz SLS AMG, which starts at 177,310 euros ($218,960) went on sale in the U.S. on May 10 and orders have been better than expected, said spokeswoman Silke Mockert. “We’ve seen very strong demand” for the 571-horsepower, gull- wing sports car, she said. U.S. sales of the top-of-the-line S- Class sedan have risen 11 percent to 3,771 vehicles in the first four months of the year, Mockert said.
Tuxedo or Business Suit?
Still, the revival in luxury-vehicle demand is spotty, Edmunds’ Anwyl said. Buyers are enticed by the newest models, while older ones, such as the Continental from Volkswagen AG’s Bentley brand, which starts at $177,600, are being sold with the help of incentives of as much as $30,000, he said.
“The U.S. market is still very challenging,” said Annette Koch, a spokeswoman at Bentley Motors Ltd. “We would expect to see some growth this year, yet a modest growth.”
Rolls-Royce sales are up 50 percent in the U.S. so far this year thanks to the new Ghost, which was introduced at the Frankfurt auto show in September, said Paul Ferraiolo, Rolls- Royce chief for North America. Priced at $245,000, it’s about 55 percent cheaper than Rolls-Royce’s most expensive model, the Phantom Drophead.
“It’s all about the product,” Ferraiolo said. “The Phantom is like the tuxedo you put on for special occasions. The Ghost is like the business suit you can wear to work.”
‘A Little Guilty’
Others are still reluctant to splash out. Tim Leuliette, Executive Chairman of Dura Automotive Systems Inc. in Rochester Hills, Michigan, already owns an Audi R8 coupe and is “considering the new R10,” which sells for $175,000.
“I feel a little guilty, so I’m not sure yet,” he said, adding that he’s heard of at least one super-luxury car, a Bentley Flying Spur, that was scratched along its sides by someone with car keys while the car was parked in Birmingham, a suburb of Detroit.
“There is a revival of interest in exotics, as well as classics and muscle cars, but this has nothing to do with the underlying car market,” said Marino Marin, an investment banker specialized in consumer and luxury goods at Laidlaw & Co. Ltd. in New York. “These cars are true luxury goods, somewhat better-compared with the collectible or art market.”
Poler, who chose a “deep, dark gray” 2010 Aston Martin Vantage Coupe, said although consumption isn’t back to where it was three years ago, people are becoming less reluctant to splash out on expensive cars and other luxury merchandise.
“Some people were affected by the recession and others weren’t going to buck the trends in their social circles,” he said of the cutbacks. “Up until about six months ago you were an a-hole if you bought fancy toys.”