The Change Mariner

Cars: A Glut In The Ultraluxury Segment

AutoWeek.com:

...Last year, U.S. consumers purchased 16,000 vehicles priced more than $100,000, a 43 percent increase over 2002.

But if one adds up sales forecasts for luxury vehicles entering the United States in the next two years, affluent Americans would have to buy an additional 7,000 units a year. That would require 40 percent sales growth in a segment that was flat the year before sales spiked.

Automakers such as Lexus, Audi and Cadillac are planning to enter the $100,000-plus luxury segment. It's unclear if consumers like Barron are ready to spend so freely.

Says Barron: "I'm not one to take a chance on a limited-edition type car, where I need to worry how I'll get it serviced. I associate that with complex, expensive, hard-to-repair cars."

The industry's expectations of growth in the ultraluxury segment have some trend-watchers nervous. Said Susan Jacobs, who tracks the luxury automobile sector from Rutherford, N.J.: "There are a lot of affluent buyers looking for exclusive models. But are there enough to absorb all the targeted volume?...

Wealthy consumers tend to be pragmatic about their vehicles, according to a survey by Unity Marketing, a market research firm in Stevens, Pa.

Unity Marketing interviewed individuals with an average income of $150,000, and found that they are leery of buying a product that costs more than some people's houses. They were especially leery of driving such vehicles among the uninsured masses and parking them at the supermarket.

Wealthy consumers also become price resistant when a vehicle's sticker price tops $150,000, says Eric Noble, president of The Car Lab consultancy in Orange, Calif. Noble has done marketability studies for several luxury carmakers.

His conclusion: The key price point seems to be $150,000. Below that price, there are plenty of potential buyers, Noble says. But significant sales volume beyond $150,000 is illusory.

"Rich buyers didn't get rich by being stupid," Noble says. "The truly rich don't want to look like it..."

Posted by Jennifer King at June 16, 2004 07:37 AM | TrackBack
Related Categories: Area - Social - Demographics | Industry - Automotive | Quadrant - Social

Luxury Fever
Princeton University Press

Amazon Price: $17.79

The Winner-Take-All Society : Why the Few at the Top Get So Much More Than the Rest of Us
Penguin (Non-Classics)

Amazon Price: $10.20

Living It Up : America's Love Affair with Luxury
Simon & Schuster

Amazon Price: $10.50

Choosing the Right Pond: Human Behavior and the Quest for Status
Oxford University Press

Amazon Price: $26.00