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Luxury Sales Surge: Are The Fat Cats Not Feeling The Recession? Page 2

 
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But there are several other reasons why luxury sales have surged. One of them is that leasing has become much more attractive. While general-market shoppers might intend to keep their vehicles five or six years or more, luxury owners tend to get a new car every three or four years, and the majority of luxury cars for those rapid-turnover customers are leased.

Luxury leasing on the rebound

Over the past year or so, leasing has recovered, from 11 percent of the market at its low point up to nearly 21 percent today. Leasing rates for some luxury brands, including Audi, BMW, and Mercedes-Benz, approach or exceed 50 percent.

"Leasing has rebounded, very strong over the past few months," said Jeffrey Schuster, director of global forecasting at J.D. Power and Associates. "That's having a lot to do with it."

While more available credit played a role, the more significant factor that's made leases more attractive and helped boost sales is improved resale value. In turn, that improvement didn't happen overnight; it's the result of better inventory management for luxury models—particularly larger SUVs—as sales have fallen. "Lower supply leads to higher prices down the line, and they'll all become used cars," Toprak commented, adding that luxury brands have understood the importance of making extreme production cuts.

But the economics of it might only be part of the explanation. "Luxury buyers are different," said Toprak, adding that image is a major part of a new-car purchase, and earlier last year many wealthier consumers saw a new vehicle as an inappropriate message to send to clients or employees.

Luxury shoppers ready again to flaunt it

"We're seeing some improved confidence versus last year, among luxury shoppers," said Toprak, who said that these types of luxury shoppers—along with high-end family-vehicle shoppers—will only wait so long, even if the economic climate isn't all that much better.

"Last year we saw everybody pull back," said Schuster, even when they could afford a new vehicle. After any economic down cycle, you tend to see luxury buyers come back to the market before others, Schuster said, and that's been the case this year.

As for the fat cats? According to Toprak, most luxury shoppers weren't affected in a way that would affect their ability to purchase the vehicle they want. "Mostly, it's been a psychological barrier, not a money issue."






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Comments (5)

  1. fb_1109206598 avatar Stephen Walton Posted: 9/3/2010 5:51am PDT

    Could this have been written in a more "hate the rich" manner? Never mind, rhetorical question. M-B, Audi, Lexus, et al owners and dealers employ Americans ("workers" to you.) BTW, I'm not an owner or dealer of any of these vehicles.
     
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  2. fb_100000985937298 avatar Billy Govender Posted: 9/3/2010 7:39am PDT

    It seems the only recession the fat-cats are concerned over is that of their hairlines. It could also be done to smart investment moves and saving money when things were good, as many people didnt attempt to do such things.
     
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  3. By  CA Ferrari for Sale Posted: 9/4/2010 5:34pm PDT

    Perhaps it is more that they realize a good deal when they see one. Now is the time to buy while prices are at their lowest and incentive offers are at their highest in many years. Not to mention gently used high end vehicles can be had at a fraction of what they were just a couple years ago. Those that have some discretionary income are just taking advantage of a luxury "blue light special" if you will...
     
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  4. By SuperSkyline89 Posted: 9/5/2010 2:33pm PDT

    There's no mystery here. The recession slaughtered sales and now that the economy is recovering the sales are returning. The only reason the increase is so big is because the decrease was too, WAY worse than that for the non-luxury makes.
     
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  5. By archony Posted: 9/6/2010 8:09am PDT

    I think the article was quite accurate in why the sales stopped. The money did not disappear for many people that buy these cars but in 2009 the uncertainty of the stock market coupled with the fact that luxury was not fashionable in 2009 meant that most people just delayed replacing the higher-end cars and so we see pent-up demand this year. It will be interesting to see how 2011 sales compare to 2010.
     
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