Luxury Sales Slowdown Could Impact Finance Market
I love to read. I am a devourer of books, magazines, blogs, tweets, and Facebook status updates. I loved reading books so much that I once dreamed of opening up my own used book store (It was going to be called Rebound Books. Get it?). I’ll find an author or genre that I like and read everything I can and then move on. I’m kind of like the reading equivalent of the aliens from “Independence Day,” who moved from planet to planet, consuming all the resources and then moving on.
I’m currently reading Walter Isaacson’s biography of Steve Jobs, and that has opened me up to the world of entrepreneurship. I’ve started reading blogs and articles about start-ups, and one of the great debates in the sector revolves around pricing. How to determine whether to sell 1,000 widgets for $1 or one widget for $1,000. The generally accepted best practice is to try and sell one widget for $1,000 because it involves less work. It was that debate that I linked back to when I saw an article last week where the chief executive of Lamborghini announced that sales of super-luxury car were expected to remain somewhat stagnant through 2013. “Uh oh,” I thought to myself. “Lenders are going to have to focus on financing more Scions and Corollas.”
To be fair, the super-luxury market does not account for a great percentage of total car sales. Lamborghini sold about 1,600 cars last year, which was 23% more than it sold a year earlier. But on a gross dollar basis, the luxury market may account for a higher percentage of overall revenue than other segments. Lamborghini’s Aventador, for example, at $2.7 million, is equivalent to nearly 1,400 sales of a $20,000 vehicle.
The presidential election was likely a very important, and final piece of the puzzle for economists to deliver their predictions on our growth prospects. If high-end carmakers are bracing for a slowdown in car sales, that could also mean other segments could see reduced demand in 2013. It will certainly mean that lenders that rely on the super-luxury market could be in for a rough 2013. Lamborghini is owned by Volkswagen AG, itself a more upmarket car manufacturer.
We’ve written recently about the low end of the new-car market, but this is the first sign that the high-end market could be in for a bumpy ride back to recovery. For the market to be humming a tune of recovery, all segments are going to have to be performing well in concert with one another. Notes of discord to could lead to much more reading material for me, should I ever decide to read about a possible economic downturn in 2013.
