Luxury cars languish as buyers in recession shun flashy rides
— -- CARMEL, Calif. — As a trio of new luxury flagships were unveiled at a fancy car show here, prestige auto executives have their manicured fingers crossed that rising stock prices and a stabilizing housing market will signal a turnaround for their cars.
Don't hold your breath. The luxury sector has taken a bubble bath this year, worse than predicted.
Folks at the upper end may still have millions socked away, but they also are mindful of appearances. Financial scandals, government bailouts, executive compensation and still rising unemployment signal that it's not the time to flaunt affluence.
"They may be trust-fund babies, but you don't want to look like a jerk," quips Rebecca Lindland, auto analyst for IHS Global Insight.
In July, luxury vehicle sales fell as much or more than mainstream brands. Cadillac was off 52.6%, Mercedes-Benz fell by 21.8%, BMW sagged 31.5%, Jaguar-Land Rover slumped 25%, and even previously bulletproof Lexus fell 16.5% from the year before, Autodata says. And for many of them, July was actually an improvement over earlier this year.
"We are hit more than the average industry," says Lamborghini CEO Stephan Winkelmann, as he unveiled a new edition of the sports car. "But we have a lot of potential customers who tell me, when the momentum comes back" they are ready to buy.
At the glitzy Pebble Beach Concours d'Elegance show this year, it was hardly obvious that blue-blood money wasn't flowing as usual. In interviews, though, executives noted troubling trends.
"To a degree, conspicuous consumption is persona non grata," said Ford Motor's North American chief, Mark Fields, as he stood with new luxury Lincolns. "Keeping up with the Joneses is passé." Calling the trouble a "social issue," Audi's U.S. chief Johan de Nysschen said, "We need a return of consumer confidence."
But Ben Poore, U.S. chief of Nissan's Infiniti line, says luxury is starting to see stabilization.
Among aggressive new products that luxury automakers trotted out for the show:
•Bentley Mulsanne. Bentley, now owned by Volkswagen, gave a coming out party with bagpipes and drums for its new flagship. It's the first Bentley devoid of any design or production influences of former owner Rolls-Royce. The Mulsanne sedan replaces the Arnage atop the lineup, with a price upward of $300,000.
•Infiniti M56. Nissan's premium brand invited a well-heeled crowd into a tent for a "virtual" unveiling of its new flagship M sedan, due in the spring. The 5.6-liter V-8 will develop 400 horsepower but be 15% more gas thrifty than the V-8 in the current M45.
•Jaguar XJ. The brand now owned by India's Tata Motors held the U.S. debut of its flagship XJ, a four-door designed to look like a coupe.
•Exotic sports cars. Ferrari's new version of its California model; Lamborghini's special edition Gallardo LP550-2 Valentino Balboni, named for the former test driver; and the 10-cylinder Audi R10 (starting price $146,000).
Contributing: William M. Welch