By on September 15, 2011

Derek Kreindler’s provocative defense of the Maserati Kubang sparked off an interesting discussion among TTAC’s Best and Brightest yesterday, about the the macroeconomic outlook for luxury brands. Sure, the American economy is struggling to stay out of a double-dip recession, credit is no longer as available as it was in the pre-Lehman days, and some argue that worse is still to come… but for the moment, the high end of the luxury market couldn’t be doing better. Rolls-Royce CEO Torsten Mueller-Oetvoes tells Reuters [via AN [sub]] that his brand will set a new sales record this year, and that the outlook for 2012 is good, saying

I have not seen any reluctance to consider buying a Rolls-Royce. I do not feel that sentiment is deteriorating in the luxury market. We are dealing with people who are unusually wealthy and never really have to ask themselves, can I still afford this or not?

And it’s one thing to just talk, but Rolls is also putting its money where its mouth is, initiating a $16m expansion to its Goodwood plant. And it’s not the only luxury brand that seems to be confused about this “recession” that the peasants keep going on about…

Fiat-Chrysler CEO Sergio Marchionne joins the “what recession?” chorus, telling Bloomberg

If you go to the Ferrari stand, there aren’t any customers worried about the recession. The last Ferrari customers I saw at the show weren’t crying.

In fact, Ferrari is capping production at 7,000 annual units in order to maintain exclusivity. If a Ferrari customer were going to cry, it would only be because they were late to the waiting list and missed the latest must-have Italian stallion. Luckily Maserati is picking up the slack, as Bloomberg explains

Even without the Kubang SUV, Maserati aims to boost deliveries by almost eightfold to 45,000 cars in 2014 as it increases dealers by 150 percent worldwide.

According to IHS Global Insight, sales of the top-tier European luxury brands, Ferrari, Maserati, Lamborghini, Bentley, Rolls-Royce and Aston-Martin, will grow double digits this year and the next. Even with the growing possibility of a deep recession in Europe, a possible Euro-zone breakup and the persistent threat of a sovereign debt crisis, the good times are rolling for the global upper-crust. Says Credit Suisse analyst Erich Hauser:

The rich have gotten richer and the number of millionaires in emerging countries is really growing so the demographic trend is very positive. Things would have to get very nasty before they face a problem.

In the meantime, the rest of us can take our minds off the grim reality facing the less-than-super-wealthy by tuning in to the automotive mainstream media’s ongoing obsession with the most unobtainable of millionaire-mobiles. Because voyeurism is free (or 83 cents per issue if you subscribe now!) and the wealthy are just doing their part to keep us entertained. Welcome to the new economy…

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28 Comments on “If The Times Are Bad, Someone Forgot To Tell Rolls-Royce And Ferrari...”


  • avatar
    ajla

    Things would have to get very nasty before they face a problem.

    Famous last words?
    ______________________

    I also think I’d rather stop reading about cars altogether if the alternative is a nonstop stream of stories on $200K+ stuff.

  • avatar
    Mullholland

    Don’t know about you other peasants but I’m anxiously awaiting the Rolls-Royce Marie Antoinette Edition. I hear it has optional rear-seat solid-gold, ivory-trimmed folding cake trays. Everybody loves cake!

    • 0 avatar
      psarhjinian

      Oh, very well put. Sums up the current market and where it’s going very nicely.

      • 0 avatar
        Mullholland

        This just in:
        Not to be outdone the by Rolls-Royce Marie Antoinette Edition, Bugatti is planning to enter the limo market with its Bugatti Jobs Creator Maximus Sedan. The JCM Sedan is so much more than a luxury vehicle—it’s actually a jobs creation program. Each one will be sold with a “dedicated” driver and riding mechanic! Bugatti calls the new feature “Chattle-Tech”.

    • 0 avatar
      ClutchCarGo

      Except that this time it seems like most of the starving peasants believe that not only should Marie enjoy her cake, they will actively oppose anyone who tries to make her share the crumbs with the peasants since that would be socialism.

      • 0 avatar
        psarhjinian

        That happened in Marie Antoinette’s time as well, although part of her troubles were the erosion of the divine right of kings, and the reason that fell is because the nobility failed to understand that part of the divine right was responsibility.

        Our equivalent to that would be the rule of law, and I would sincerely hope that things never get so bad that the poor en masse start questioning the rule of law and private property rights.

        There’s some interesting symmetry, there, too, between the Church (which endorsed the Right) and the modern media, plays a similar role.

    • 0 avatar
      Hildy Johnson

      Help! Help! Communist infiltration!

  • avatar
    jmo

    I was shocked by how much DeadWeight’s rant on the original post was based on wildly misinterpreted data.

    Thanks Pch101 for countering all the false claims.

  • avatar
    stuki

    As long as the officially recognized response to economic slowdown, is to take from the poor (and/or their kids) to bail out the rich, of course luxury goods demand is going to correlate negatively with economic growth. And ensuring that things stay that way, is exactly what publicly funded indoctrination is all about, right?

    Essentially more insidious, is the massive misallocation of capital that results from producers seeing the demand distribution so artificially skewed in favor of that which the well connecteds prefer. An economy where demand signals encourage young people to hone their skills at polishing the teak wood flooring on some bailed out toff’s Rolls, rather than at building something useful; is an economy too weak to stand on its own. Thankfully, economies like that, are also a surefire sign it’s enabling culture is way past the point of giving a damn about saving anyway.

  • avatar
    HiFlite999

    From my own interest, I seldom bother reading about $150k+ cars, the exceptions being where a technology is showcased that may have wider application in the future, McClaren carbon fiber, for example. In terms of how things “should” be, the huge and increasing gap between rich and poor is a big problem. However, if one looks at where that extra $300k (wheether he deserves it or not)burning a hole in somebody’s pocket “should” go, it’s better spent in purchasing ridiculous cars than buying gold bars sitting in a Swiss bank’s basement. At least the conception, design, and production of that car employs real people.

  • avatar
    340-4

    No surprise.

    As the global elite get richer, and the rest of us slide into third world status, luxury providers such as these will continue to profit as their customers are largely unaffected by sways in the economy.

    We’ll see a social stratification of cars; those under $40k, and those over $200k, with no middle ground. Those at the bottom have a ceiling, and those at the top have taste. Right?

    • 0 avatar
      Philosophil

      The most disturbing thing is that the gap between the ultra rich and everyone else has been increasing in such a disproportionate manner. It’s not just that the ultra rich are getting richer (because one would hope that’s true of everyone), but they’re getting richer at a disturbingly disproportionate rate to the rest of the population.

      Canada and the USA may claim to be democratic societies, but a new form of aristocracy has sprung up here that has become quite disturbing.

      • 0 avatar
        jmo

        The most disturbing thing is that the gap between the ultra rich and everyone else

        That’s not really an accurate assessment. The most likely culprit is skills-based technological change.

        We document the spectacular rise of U.S. wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in wage inequality since 1980 can be accounted for by rising educational wage differentials, just as a substantial part of the decrease in wage inequality in the earlier era can be accounted for by decreasing educational wage differentials.

        http://www.nber.org/papers/w13568

      • 0 avatar
        psarhjinian

        That’s not really an accurate assessment. The most likely culprit is skills-based technological change.

        This is true, but it’s also misleading, and a large part of why the education system has significant problems.

        We, as a society, made a big cum hoc ergo propter hoc about this: we noted that the well-educated made more, so we pushed higher education. What we did, as a result, was devalue knowledge skills, dumb down education to allow more people in, and in the create a glut of over-credentialed** people because what made highly skilled people capable earners was their rarity, not their education.

        So now, instead of an uneducated but effectively employed blue-collar labour force, we have an overeducated, underemployed white-collar labour force as well as unrealistic expectations of the amount of education required to do a task, and an education system designed to crank out degreed and diplomated units.

        And we still have an unofficial aristocracy.

        Technology, if it’s done anything, has managed to mask the problem by enabling additional efficiences and bringing up the standard of living, but it hasn’t fixed the structural problems.

        ** When I managed a helpdesk, and later a DC, I was driven nuts by HR insisting I hire people with post-secondary, preferably university, degrees in Comp Sci or Electrical Engineering, for entry-level positions. Why the hell do you need Comp.Sci, which is basically a math degree, to field calls about Microsoft Word and/or swap tapes?

      • 0 avatar

        I’m not sure differences in education explain the rapid expansion of a tremendously wealthy group of people. Other differences less easily measured, perhaps.

      • 0 avatar
        psarhjinian

        The most disturbing thing is that the gap between the ultra rich and everyone else has been increasing in such a disproportionate manner

        Fun little chart from The Economist to that effect.

      • 0 avatar
        jmo

        people because what made highly skilled people capable earners was their rarity, not their education.

        Exactly, but it still doesn’t explain what we should do with those of limited intellectual ability.

      • 0 avatar
        jmo

        Fun little chart from The Economist to that effect.

        I’d have to assume the 90th percentile includes a large number of those commenting here via the computer at their office. A household income of 125k isn’t all that hard to achieve for anyone reasonably competent.

      • 0 avatar
        geeber

        Philosphil: Canada and the USA may claim to be democratic societies, but a new form of aristocracy has sprung up here that has become quite disturbing.

        Reading the article, I don’t get the impression that they are talking exclusively about rich Americans, Canadians or even Europeans. I would be willing to bet that lots of these rich people are NOT native to those areas, even if they live there.

      • 0 avatar
        Philosophil

        I’m with Michael. While differences in education will certainly contribute to the formation of class differences (along economic lines), that alone is not sufficient to explain what’s been happening in this case.

      • 0 avatar
        bd2

        “That’s not really an accurate assessment. The most likely culprit is skills-based technological change.”

        - That doesn’t explain how the CEOs of today get paid exponentially more than the CEOs of the 60s and 70s in comparison to that of their company employees.

        Over the past 2 decades, we have seen a great shift of wealth from the American middle class to 3 places: 1) CEOs and finance sector), (2) China and (3) the oil rich countries.

        We haven’t seen such an inequity btwn the wealthy and middle class since the time of the Robber Barrons.

      • 0 avatar
        korvetkeith

        IMO the largess and size of government in the US has required monetary easing by the federal reserve bank. While lots of the spending the government does has been an attempt to redistribute wealth, I think the plan backfires and creates the reverse scenario. The inflation caused by the federal reserve bank allows the financially savvy and wealthy folks to get even richer. The poor and dumb folks that don’t know what’s going on, and are taking handouts from the government, are actually getting squeezed by inflationary pressures caused by the printing of the money that they are given.

  • avatar
    VanillaDude

    While we may not be living in an emerging super economy since we are already a super economy, others are. Historically, when this happens, the new wealthy class buy things like these kinds of cars. With wealth being diverted from the US towards those places once undescribably poor, this diversion creates new wealthy people. That is nothing new.

    So, among the status quo super wealthy, these cars are, um, cars. But to the new super wealthy, this is their chance to get a car they have always dreamed about, even while living in absolute squalor as children.

    So, I see these companies benefitting from new emerging markets, not from flaunting Americans. So, sorry, your Sociology professor’s harangues about inequality apply about as well in this case, as in reality. That is, not at all.

    And the only educational problem I ever faced over the past twenty years at universities in the US and in Europe has been the professorial kind. Honestly, the last thing we need on Earth is another liberal arts graduate. I swear to god they haven’t a freakin’ clue how the world really works.

    • 0 avatar
      Mullholland

      Yea, like your MBA finance friends have a clue. I’m sure those relatively benign yet ultimately worthless Liberal Arts graduates just didn’t have the “high-value knowledge set” to nearly bring the world economy to its knees. Well, we do agree on one thing: Reality is so much better than a Sociology professor’s harangue.

    • 0 avatar
      bd2

      Yeah, all those Wall St. types and execs from big banks and mortgage companies, not to mention rating agencies, accounting and law firms, etc. – really did a job on the world economy.

  • avatar

    There will continue to be more people without them

  • avatar
    Joss

    A fair amount of Roller sales are to hotels not individuals? The truly wealthy is usually dead stingy and wouldn’t be caught dead in some Britanic-imperial badge engineered bit-of-tat from Bavaria.

  • avatar
    shaker

    The wealthy have given those of us near the bottom of the pyramid something to aspire to… we should be properly grateful.


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