The downturn in the economy isn't just affecting the mainstream automakers. The Wall Street Journal reports luxury car manufacturers are also suffering. (Yes, suffering.) In March, luxury car sales sank 14 percent from last year. "Super luxury" cars such Bentley, Rolls and Maybach were hit the hardest– the uber expensive segment fell 39 percent. Of those models, Bentley was the biggest loser, with a 42 percent loss. Entry level luxury models (BMW 3-series, Mercedes C-Class) were down by 13 percent. Middle (though not middling) luxury cars (BMW 5-Series, Jaguar S-type, Infiniti M35) were down 20 percent. And upper luxury vehicles (Mercedes E-Class, BMW 6- and 7-Series) dropped 24 percent. It's probably not a very good sign for the rest of us when even the wealthy start economizing on their whips.
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Would there be a looming recession if the media weren’t constantly telling us there is a looming recession? I thought this was interesting:
http://tinyurl.com/3zrf9o
I’m doing better than ever before and so are most, if not all, of the people I know. However, I hear nothing but doom and gloom concerning the economy (and everything else, for that matter).
Some are even saying this is a new Great Depression. I call bunk.
Does this mean that the lead time on these high end vehicles will return to acceptable levels?
TexasAg03: I’m doing better than ever before and so are most, if not all, of the people I know. However, I hear nothing but doom and gloom concerning the economy (and everything else, for that matter).
Some are even saying this is a new Great Depression. I call bunk.
I agree that the talk about a “new Great Depression” is nonsense. We are nowhere near that point as of yet.
There is, however, a major correction occurring with housing prices, particularly on both coasts. Many people have purchased “more” vehicle than their take-home pay could otherwise support by borrowing against the rising value of their homes. That source of financing is now gone for many people, so I would imagine that it will seriously hurt sales of luxury and near-luxury vehicles.
Rising gasoline and food prices also hurt people, leaving them with less money to spend on a new vehicle. My car is paid for, but since it’s still in good shape, I’m not about to sign up for 3-4 more years of payments, on top of higher gasoline and food prices. I’ll bet that lots of people feel that way.
Always take the unemployment results with a grain of salt. Anyone that cannot find a job before their unemployment benefits runs out is no longer accounted for.
In other words, once your unemployment runs out and you aren’t employed, you’re no longer counted in the out-of-a-job category which makes the unemployment stats stay nearly steady.
Here in Central Ohio salaries are flat and jobs are starting to slow down more, so in this neck of the woods things aren’t so rosy.
Waaahhhh!! Bimmer dealers might actually have to treat customers with something other than arrogance now!! Oh, the inhumanity of it all!! They might actually have to hustle to make a sale!!
actually the rich probably have more to lose than us poor folk. I mean if stocks all go to zero.. my direct loss is zero. Now i know poo rolls down hill but my craftsman tools only go up in value if the world would crumble tomorrow.
I’ve been looking for a job for 3 months now and am getting almost nowhere. It is scary how few calls I get back. It has never been this bad before.
And I am not counted since I can’t get any benefits after working overseas for a long time.
I’m seeing it first hand. The salaries being offered are less than I was making back in 1987, not counting inflation. I get similar feedback from other friends of mine with 20+ years of experience in their field. The companies want to pay the same as someone fresh out of school.
I have long been stunned by the shear numbers of people here in Northern California driving $50k and up, way up, new vehicles.
One subset of these were highly compensated people involved in selling and financing real estate. When the average home sells for $700k, those percentage points of commissions ad up fast. Many of said people are suddenly not in the market for a new S-class.
Then there were all the people taking money out of their homes to finance an ostentatious lifestyle. Cash out refinancing is dead.
The other flash-the-cash type seems to be high end workers in the technology industry, but they are getting squeezed by the movement of many of those jobs out of the area.
In the NYC area the big money grave trains have been Wall Street and Real Estate. Those trains have gone into the yard for extensive repairs.
The good news is that this will force car companies to focus on being competitive in the bread-and-butter categories instead of chasing the ultra-luxury gravy train. Hopefully this also means that the rumored return of the VW Phaeton to North America isn’t going to happen.
Tough economic times seem to be necessary to wring excesses out of the market. Hopefully the medicine will be more like a stiff round of anti-biotics and not like full on chemo-therapy.
“I’m seeing it first hand. The salaries being offered are less than I was making back in 1987, not counting inflation. I get similar feedback from other friends of mine with 20+ years of experience in their field. The companies want to pay the same as someone fresh out of school.”
I’m seeing that as well. The clerks at the local Home Depot and Radio Shack are sometimes experienced engineers with 20+ years in the field who now find themselves once again working in the kinds of jobs they worked at part time in college. Unfettered free trade means everyone has to compete with workers in India and China. But, those workers in India don’t face the prospect of a $600-700k price for a modest house like the workers of Silicon Valley do.
“I’m doing better than ever before and so are most, if not all, of the people I know.”
A great deal depends on where you are, what you do and how old you are. Recently we visited Austin, TX and caught up with many old friends there. They seem to be doing pretty well across the board. Silicon Valley where we live now is a much more mixed bag. The young Google-heads are making good money. The 45+ year old experience marketing and engineering folks are having a tough time.
I am starting to get concerned over finding a job. I have been unemployed for 7 weeks and began seriously looking 6 days ago. Several employers wanted me to get to work by 8 AM. Too early. Some asked that I work an occasional weekend. I don’t do weekends. I also don’t care to wear shirt and tie either. I’ll keep plugging away…
@Skooter:
What sector are you working in? You sound awfully picky for someone “seriously looking” for a job.
I’m hearing that the expiration of the Bush tax cuts and recent “Millionaire taxes” in some states are going to keep the upper-middle class to wealthy from spending anything, and lead to them moving to less tax-happy states. Doesn’t sound good for the luxury segment.
The systematic redistribution of wealth continues.
Having worked on the edges of the financial industry, I can tell you, that is where the money is. And now that that area is tanking, all those very wealthy folks are wondering if the party is over. They are probably thinking that the current 7-series BMW out in the garage will last another year. After all, a little austerity is good for the character now and again.
-GBG
http://www.autoclay.blogspot.com
The Bush tax cuts gave over 50% of the breaks to the top 1% of earners in this country. As of 2005, the amount earned to be in the top 1% was about $350,000.00. Not exactly upper middle class if you ask me. You are right, the redistribution of wealth continues.
golden2husky: The Bush tax cuts gave over 50% of the breaks to the top 1% of earners in this country.
You do realize that the bottom 50 percent pay NO federal income taxes? The top tier of taxpayers also pay most of the taxes.
golden2husky: As of 2005, the amount earned to be in the top 1% was about $350,000.00. Not exactly upper middle class if you ask me. You are right, the redistribution of wealth continues.
I wonder where those families making $350,000 annually live. If they live in New York City, Boston, San Francisco, Los Angeles or Washington, D.C., all I can say is, price a house in those areas some time (or at least one within a reasonable communting distance – there is always relatively cheap housing in distant areas, but who wants to drive 1.5-2 hours each way to work?).
A six-figure salary for a family of four doesn’t go as far as you would think in those areas, especially if they are faced with buying a house for the first time.
The Bush tax cuts gave over 50% of the breaks to the top 1% of earners in this country. As of 2005, the amount earned to be in the top 1% was about $350,000.00.
The top 1% of earners paid between 35 and 40% of the taxes in 2005. The top 25% of earners paid around 86% of the taxes in 2005. The bottom 50% paid less than 10% (one site said 3%) of the taxes in 2005.
This is from Deloitte:
http://tinyurl.com/4hylj2
The sharp rise in the share of taxes paid by the top income earning households has also distorted the debate on tax burden. In 2001 and again in 2003 income taxes were cut. On a dollar basis, those who paid the most in taxes, not surprisingly got the biggest cuts. However, by looking at the tax dollar cuts as a share of total taxes paid, a very different picture emerges. Using this approach, the biggest percentage cuts went to the lowest income classes with the bottom 20% receiving a reduction of nearly 120% of their income tax burden while the top 2001-2003 Income tax cuts as a share of tax burden by income segment, chart1% received a cut of just 13%. As a result, one of the effects of the tax changes in 2001 and 2003 was to make the distribution of income slightly more equal.
A couple of posters said “the redistribution of wealth continues”. Actually they mean redistribution of income, not wealth. The estate tax was adopted to redistribute wealth, sort of a “no one should leave that much to his heirs” idea.
It’s pretty hard to give 50% of income tax breaks to the bottom 50% of earners, because they pay little or no income tax (and may file just to get money from the earned income credit.) We’re getting close to the point where a majority of the voting public will realize they’ll be unaffected by income tax hikes and will conclude a 99% tax rate on the payers is just the ticket.
As was said long ago, “To tax and be fair, no more than to love and be wise, is not given to man.”
@golden2husky:
350,000 is exactly upper middle class when BOTH people work.
You can have the same discussions for the luxury market as the other market segments. When overall sales are down everyone is down.
It shows that even the folks that lease luxury cars are attracted by the various financial incentives that are offered from the manufacturers.
Bentley does well in the areas where the real estate is the most challenged…
Is it a looming recession or folks taking a breather and asking how much material things do they really need on top of what they already have…
I try to feel sorry for folks sitting in the upper stratosphere of the economic scale, but I just can’t force myself to do it. I don’t consider myself poor, but $100k a year with a 16 year old child staring college in the face doesn’t make me feel rich, either. I live well within my means, owning a five year old Jeep Liberty and an 11 year old Toyota Tercel pushing 174k (man, I love that thing!). Junior will be needing his own ride by the end of this summer, and while I’d dearly love a newer car for me, I’ll most likely wind up buying another $2000 beater and giving my son his car back. We may not be in a true recession, but the thought of making another car payment (or any kind of debt payment beyond the house I live in) is something I can’t stomach. Call me anti-American (as it seems the “American” thing to do is to load up on debt to the point of sheer stupidity), but my days of credit cards and car loans is over. So while we may not be in a recession, the realities of the economy are forcing (me, at least) to make changes to my personal financial plan. And maybe that’s a good thing for the country in general…
Here in NYC the blood bath has hit the financial markets, and losing, what about another 12,000 Bear Stearns jobs soon, isn’t going to help. There is a glut of job candidates in this industry.
In the ‘burbs this has killed real estate in places like Short Hills, not just the ‘average” condo market.
Its these folks, with the huge bonuses, that would spend, spend, spend on real estate, cars, travel, entertainment. All those areas are going to suffer – and everyone downhill of that economy will suffer too.
Perhaps there will be some ridiculous deals on Bentley’s in the near future.
(and Tata couldn’t have bought Jag/Landrover at a worse time!)
Pete
Luxury car sales will take a hit from the lose of poser and sort-of-affluent customers, but if the economy really tanks, the truly wealthy will also avoid luxury brands.
During the depression, wealthy people avoided drawing attention to themselves by not driving “in-your-face” bling-mobiles. When your average unwashed is standing in line for his government cheese, someone driving a new 7 Series is a mighty tempting target.
I have to think that the link pertaining to how the Dummycraps are talking down the economy is somewhat simplistic.
On one hand, yes they are doing that – and their lapdogs in the main stream media (which all swing left) are following along.
Yet discernment of what goes on around me in our nation tells me we are in a heap of trouble.
As in, the dung has already slid off the huge shovel and is coming down on our heads real soon.
The reason there is a slight disconnect between the official figures not showing things as bad as they are, is because Repugnicans are better at fiddling official figures.
They have actual biz experience, while a lot of Dummycraps just sit in ivory towers and teach college kids how to be socialists.
What’s that old saying “those that can’t, teach”.