Ferraris & Rolls-Royces: why are they selling well now?

In the middle of a depression in car sales worldwide, only the sale of “Super-luxury” cars with a price tag of over 10 million yen like Italian Ferraris is increasing. It seems nothing can affect them. Some say the reason is because their customers are a handful of the wealthy class called “Super-rich” such as politicians and royal families and those people’s wealth is not easily affected by the change in the economy, but others say that some people buy them as a risk-free asset like gold.
Last year, the manufacturer who reached record high sales was Ferrari, one of the well-known luxury sport car brands. With 2 years worth of unfinished orders, they increased their production. Although the sales in North America dropped slightly, they sustained their strong economic performance in the Middle East and Asia, selling 450 in Japan with a 9.2% increase over the previous year. Their new model sport car “California”, first shown to the public at the Paris International Motor Show last autumn, cost more than 20 million yen but soon after the photos of the car were published, orders flooded in to push this year’s numbers of sales for the whole of Ferrari.

Another Italian brand Maserati recorded 580, a 25% increase in sales in Japan last year and 8600, a 17% increase worldwide, which was their 2nd highest in history. Their new model with automatic shift brought expansion in their sales in the US market. They showed their new luxury sedan “Quattroporte Sport GT” at the January North American Auto Show and received favourable comments. They are targeting a similar number of sales this year. Also British Rolls-Royce, whose car prices are around 40 million yen, increased their world-wide sales by 10%.

On the other hand, Germany’s Mercedes Benz whose cars are luxury but the average prices are around 5 million yen, is struggling. In 2008, the worldwide sales of BMW have dropped by 4% and in Japan total sales of the BMW brand have dropped by 23.7%. Mercedes Benz sales in Japan have dropped by 21.0% and they are facing a harsh situation. Toyota’s luxury brand “Lexus” has also experienced a drop of 16.1% in worldwide sales and 25.4% in domestic sales.

Super luxury cars are doing extremely well. For their particular customer segments, these cars seem to retain their value even after they become used, some economists pointed out that “they have universal value as an asset while the share market is fracturing”. I guess you can only buy these super cars from special dealers so if you want to buy one you will not have many places you can go. Therefore, there is not much competition in prices and they are traded at in a high price range.

It seems odd that only super luxury cars are doing well during this world recession, doesn’t it?


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