Daily Podcast: Will Luxury Car Sales Suck?
Rising U.S. gas prices and the American mortgage meltdown has hit sales of new vehicles hard. In terms of the product mix, a lot of ink has been expended on the rapid, ongoing transition from gas-guzzling SUVs to more miserly models– a change that's hurt the truck-heavy domestics particularly hard. There's been something of a presumption that luxury and near-luxury brands are safe from the tumbleweeds blowing through mass market showrooms. Marketing Daily reveals that it ain't necessarily so. "Recent years represented a boom-time for American investors and the luxury marketers that filled their homes with Lexus SUVs, Rolex timepieces and Coach handbags. Now, the net worth of even wealthy Americans is dipping as real estate prices slump and stock portfolios sag. And, as investment banks and government economists begin beating the drums of recession, even high-net-worth households are cutting back." Is this the right time for Mercedes to launch their AMG sub-brand, or VW to go upmarket? Hell no. And one has to wonder if [presumed] declining sales at Lincoln (the main cause for optimism at Ford), Land Rover (whose sale is already in jeopardy), Jaguar (mega-dittos) and Cadillac (whose CTS is the poster child for GM hopes of a product led turnaround) will stress the automakers to the point of no return. Watch this space.
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No way. With banks and corporations across the board likely to post record losses, the executive bonuses should be huge.
With the dollar tanking against the eura and the yen there's NO WAY that prices will be reduced in the US on imported luxury cars. In fact I suspect the prices will be increased even as sales fall just to maintain some minimal profit margin.
New luxury car sales might suffer, but CPO sales of entry luxury cars might actually increase. Our current economic difficulty may make people reassess what they value. Some may find that rather than spend $32-35K on a car, they may only be able to $25-29K. Now, if they are a person who HAS to have a new car, then they are back to shopping Camry, Malibu, Accord, etc. But, if they search for value, they can get a 2-3 year old "luxury" vehicle for the same price. Over the past 10 years I have grown used to my car having certain items - leather, dual-zone ac, nice stereo, heated seats, and having a certain cache (yeah, I'm shallow like that). Over the past few years a few "non-luxury" cars have appealed to me enough that I have taken the time to check them out in person. However, the exterior appeal or utilitarian appeal or "blast to drive" appeal usually fades when I see the interior...and I drive Infinitis, not necessarily known for their interiors. I guess you just grow used to a certain quality. On the occasion I actually service my cars at the dealer, I like the service experience better too; they kiss my ass. So, I don't want to drop down to non-luxury cars, but at some point, I get tired of burning money on fuel....I can handle $4 a gallon, and I can make $4.50, but if it goes to $5.50-6.00, well, then I'm out. It becomes a "principle" thing at that point. If anything, the luxury brands somehow need to change the idea that luxury = use lots of gas. I love my G35, but my next car is going to be a hybrid. It just is. I think it will be a Nissan Altima, but if Acura made the TSX a hybrid, I would be all over it. If they made the TSX AWD and hybrid, I think they would have a hit. Is it even possible to make a RWD or AWD hybrid? I don't know the scientific answer to my question, but if that were possible, that would be sweet. So you lose some acceleration power - but you gain fuel economy (would you lose it all with added weight of AWD?), and you get to keep the luxury and if you have RWD or AWD you get improved handling. Sounds like a fair enough compromise to me. Light and flickable is quite entertaining. But it all comes down to changing the mind of the consumer, or, at least waiting until oil prices change the mind of the consumer, thus eliminating the, luxury = I can blow as much cash as needed on fuel. I hope this was coherent.
"No way. With banks and corporations across the board likely to post record losses, the executive bonuses should be huge." Are you saying that execs compensation will go up as their companies results become worse? But, but, this wouldn't be right, would it? No, but it'll be real as Toll Brothers builders have demonstrated with recent moves in the board room. A new bonus plan has been adopted that will base CEO Robert Toll's bonus on criteria different than used in 2007 when he received no bonus. Up to now, his bonus has been tied in part to shareholder equity, but the stock price has fallen 50% over the past three years and 35% in the past year. He received a 2005 bonus of $27.5 million, $17.5 million in 2006, and no bonus in 2007. Screw that. Under the new bonus plan, Mr. Toll will get an amount based partly on the company's income and on whether Mr. Toll meets a "varied," but undisclosed, set of criteria determined by a compensation committee. Now we're talkin'. In 2007, if the proposed plan had been in place, Mr. Toll would have received a $1.36 million bonus based on income and could have been eligible for as much as another $5.2 million if he had met the other criteria. Who wants to bet he gets it done with the 'undisclosed criteria'.