Auto sales slumping? Not if you're a Maserati dealer

Posted Dec 1st 2008 2:55PM by Joseph Lazzaro
Filed under: Forecasts, Other Issues

"My Maserati does one eighty five,
I lost my license, now I don't drive."
-- "Life's Been Good," Joe Walsh

U.S. auto sales most likely will register yet another year-over-year decline when Big Three auto manufacturers report November sales on Tuesday.

But that's not to say that all segments of the auto market are in free-fall, revenue wise: sales of many high-end or luxury cars are doing just fine. Sales of many high-end luxury cars are flat or down just slightly this year, in contrast to double-digit declines seen in typical vehicle categories.

Ferrari's U.S. sales are down just 3%, Mazerati's sales are up 10%, and Rolls-Royce's sales have risen an eye-opening 32%, according to data collected by Autodata.

It's been a great decade . . . for the gentry

Economist David H. Wang said the luxury car statistics are consistent with a macro-consumption theme pervasive throughout the decade: for the most part, luxury brands and super-exclusive brands did well.

"One thing the decade's economic policies did accomplish was a substantial increase in wealth among upper income groups, especially the already wealthy and the super rich. Most people earning more than $300,000 a year have had their best decade ever," Wang said. "That's been very good for luxury product sales, like luxury cars, luxury homes, fine art, jewelry, and vacation homes. Unfortunately, the decade's income and wealth gains at the high end doesn't mean too much for broad-based consumer demand, and for the overall U.S. economy." Wang added that he does not have a rating on or an investment stake in any auto manufacturer.

Further, while Wang does expect the stock market's plunge from 14,000 to about 8,500, and its implied wealth destruction, to damper demand for luxury cars, homes, and art, "this will only be a modest decline, a matter of degree."

"We may see some high-end consumers 'downgrading' from a new Maserati to, say, a new BMW 7-series, but I think most people would agree this is not a meaningful downgrade," Wang said.

Auto Sector / Economic Analysis: There's nothing wrong with consumption at the high end, but the fact one segment is purchasing cars at a reasonable pace, while other consumers -- if they're in a position to buy a new car -- can't get a reasonable financing package, speaks to the problems currently plaguing the U.S. economy. The U.S. economy will not resume a sustainable growth track until a broad section of society is seeing their real income rise, and normal credit conditions reappear.

Tags: auto sales, Chrysler, F, Ferrari, Ford, General Motors, GM, inthenews, Maserati, median incomes, Rolls-Royce, TM, Toyota