Rich get richer, exotic car makers winning
THE STEERING wheel may be slowly going out of style, but no one seems to have told the Ferrari set.
Purchases in this rarified strata of the auto industry are accelerating far more quickly than those of the pedestrian cars and crossovers catering to the Costco crowd. Now, it’s poised to shift into an even higher sales gear. Over the past five years, the five brands that sell their cars for US$200,000 (RM90.000) and up-Bentley Motors, Ferrari, Automobili Lamborghini, McLaren Automotive, and RollsRoyce -have collectively managed a 51 per cent increase in the annual number of machines sold. Last year, 30,000 of these exotic beasts roared out of dealerships.
So much for scarcity. During the same period, the global auto market as a whole failed to keep pace, growing by just 23 per cent, according to Bloomberg Intelligence.
“I like to keep one from each brand,” said Anthony Tonokaboni, a disposable-glove magnate and self-professed car nut. At the moment, the Los Angeles executive has a 2012 Ferrari 458, a McLaren 650S Le Mans, and, on order, a Porsche GT3. Tonokaboni borrows his business partner’s Bentley on occasion and, in the next year or two, intends to buy a McLaren 720, which starts around US$290,000.
Indeed, much of the recent growth at the socioeconomic peak of the car world has come from McLaren, which has gone from a boutique skunkworks hammering together a few hundred cars in 2011 to a polished manufacturer on par with the most bourgeois Italian brands. In 2016, it sold 3,286 autos, almost as many as Lamborghini.
Jolyon Nash, the company’s executive director of global sales and marketing, said the “right number” for the brand is from 4,500 to 5,000 vehicles a year. Customers are taking to the British whips because they are more comfortable and pragmatic than they look. “We find McLaren customers want a car that is the best of both worlds-which is to say a car they can drive to the grocery store in, but then take to the track on weekends,” Nash explained.
Mike Ward has long sold cars from Maserati and Nissan’s Infiniti at his Denver dealership. Six months ago, he added McLaren to the lot and is on pace to sell at least 40 of them annually. “To be honest, there was a little pent-up demand,” he explained. Most of the buyers are in town, but Ward said some are coming from Wyoming and Kansas.
“At the moment, there’s plenty of money here, and people like sports cars,” he said.
Elsewhere in the pack, both Ferrari and Lamborghini have goosed the pedal a bit on production. As Volkswagen was slogging through its diesel scandal, it quietly more than doubled the number of Lamborghinis coming out of its factory near Bologna. Meanwhile, Ferrari blew by its self-imposed cap of 7,000 vehicles, in part to appease investors since its initial public offering back in October 2015.
Underlying this luxury product push are some very cushy economics. The world simply has far more rich people than it did five years ago. Thanks to a bullish stock market, there are now 226,450 or so “ultra high net worth individuals” those with assets of more than US$30 million. Those ranks have swelled by 21 per cent since 2012, according to Wealth-X.
And the wealthiest of that bunch have had a few pretty good years of late. Since October 2012, the combined net worth of the world’s richest 100 people has increased 39 per cent, to $2.6 trillion, according to the Bloomberg Billionaires Index. Apparently, some of them have been shopping Ferrari on the stock market, as well as the dealership.
In a way, it’s odd that the car world’s most opulent brands aren’t selling even more vehicles. Consider the financial gearing in the economy right now: To a billionaire, buying a US$200,000 car-say a 2017 Ferrari Californiais mathematically equivalent to the average American household (PDF) splurging on a US$19 martini. It’s a brief intoxication with, at most, a fleeting moment of regret the next morning.
Of course, if these companies make too many quarter-milliondollar vehicles, the jet set won’t want them, or at least won’t be willing to pay quite as much for them. A huge part of the value in these carbon-fiber pleasure pods isn’t just the atomised air fresheners and cockpit trim that approximates an antique viola. It’s their exclusivity.
“If you’re a car company, you have to think about scale and volume and simplification,” said Gerry Spahn, head of communications for Rolls-Royce North America. “That’s why we say we’re not a car company, we’re a luxury goods maker.”The trick is getting people to pay even more for the same number of vehicles.
This is why marques such as Ferrari regularly roll out limited edition vehicles, slightly souped up versions of their standard fare that cost three or four times as much. The fancy McLaren that Tonokaboni bought was one of only 50 made to commemorate the brand’s Le Mans victory. It cost roughly 40 per cent more than the standard version of the same model.
Rolls-Royce has engineered that sweet little economic motor into its entire product line via its bespoke programme. Today, about 80 per cent of Rolls-Royce customers customise their chosen cars with details that cost an additional 20 per cent, on average.— WP-Bloomberg
We find McLaren customers want a car that is the best of both worlds-which is to say a car they can drive to the grocery store in, but then take to the track on weekends. Jolyon Nash, the company’s executive director of global sales and marketing