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Sales of luxury cars have been slipping for some time now. No surprise there—we may not be living in refrigerator boxes (with decent Wifi connections, hence you reading this post), but we’re not completely over the 2008 recession. And yet, luxury cars have sunk even lower in the market for some time now, and not just for obvious reasons.
In the first quarter of 2010, luxury car sales were up 8 percent. So what’s the problem? Well, the rest of the light car market grew by 26% in that same period—which means that the luxury market decreased about 1.5%, from a former share of 9.4%.
Polk Research, the firm that organized these sales trends, points to five categories within the luxury-car market: Basic, for entry-level cars like the Nissan Maxima and Infiniti G37; Mid, like the Cadillac CTS; Prestige, like the Lexus LS; Prestige Sporty, like the Porsche range; and Roadster, like, well, the Mazda MX-5. The American luxury market mostly consists of the first two categories, for an 82% lion’s share, and the Cadillac CTS is the best-selling luxury car in America, at 7%.
Even Basic Luxury sales are dipping, by about 10% from 2010 to 2011. So aside from the recession, why is nobody buying lugg-jury anymore? Polk researchers believe that it’s because the styling and features once available in luxury cars are trickling down to more affordable cars. When even a Ford Focus comes with rain-sensing wipers, once only available on the 1996 Cadillac Deville Concours d’Elegance, the need for people to drop thousands more on envy-inducing ostentation wanes. And when even the Hyundai Sonata comes with Bangle-inspired “flame surfacing,” well, it only reinforces the other reasons Polk listed, such as rising gas prices and the inevitable post-recession spending guilt.
Damn, it may feel good to be a gangsta, ridin’ around town in a drop-top Benz, but as another rapper put it best—pimpin’ ain’t easy.
Ferrari might be opening a theme park this fall, but there’s already trouble brewing in the automotive world’s Magic Kingdom as the Italian automaker takes steps to idle one of their engine plants and lay off 600 workers after demand for Ferrari engines utilized by sister brand Maserati has fallen.
According to a Bloomberg report, the company intended to make 20,000 vehicles this year, but has reduced targets to 11,000, however Ferrari spokesman Stefano Lai refuted these claims to Bloomberg and said that 6,000 vehicles would be produced.
In an email statement, the company cited the economy as one factor in the layoffs, stating “Ferrari has to respond to market demands that rise and fall in an ever less-predictable fashion.
Due to a predicted decrease in output at General Motors for 2009, it is expected that the U.S. automaker will be surpassed by German rival Volkswagen AG by the end of this year.
The news comes from industry market research firm R.L. Polk Germany and is based on overall production numbers. Polk envisions an annual decline in production for General Motors to be approximately 31 percent, as compared to a decline of just 15 percent to Volkswagen, which won’t take as hard a hit due mostly to it’s limited involvement in the U.S. market.
If Polk’s estimates are correct then GM will slip to third position overall with Volkswagen taking up the second-place spot behind Toyota. The General appears to be standing on a slippery slope, as up until this year it laid claim to being the world’s largest automaker for 77 straight years. Then in January came the news that Toyota had out-produced GM with 8.97 million vehicles compared to 8.36 for GM.
Hyundai performed well above the industry average for March, which may be one of the main reasons by both Ford and GM have copied the Korean automaker’s job-loss protection incentive. (Photo Credit: Liberty Cars]
Well, it ain’t getting any better. The recession continues to bully automakers as creditors continue to bang on their front doors
The industry average for car sales in the U.S. for the month of March is 36.8 percent below last year – and to a certain extent that sugar coats the problem as many of the major automakers posted worse numbers.
General Motors once again has the dubious distinction of the worst sales with a decline of 44.7 percent. Ford did only slight better less-worse with a decline of 42.1 percent. Chrysler was down 39.3 percent.
And it’s not just the Big 3 that are hurting. Toyota was down 39 percent and Honda dropped 36.3 percent and Nissan 37.7 percent.
Hyundai was one of the few companies to not take a serious hit, with sales decreasing just 3.3 percent. The Korean auto manufacturer has implemented a it’s assurance job-loss protection program and while it’s not clear if that is the reason for the considerably above-average sales, both GM and Ford recently announced similar programs.
Low consumer confidence and a tight credit market continue to be two of the main factors discouraging car sales. Confidence, especially in almost bankrupt companies like General Motors and Chrysler continues to be a major reason for stalled sales. Access to credit has improved slightly, however, something BMW President Jim O’Donnell sites for the less than awful 22.9 percent decline in his company’s sales.
The Obama Administration is also helping increase access to credit by forcing GM’s credit provider GMAC to resume subprime lending.
According to Standard & Poor’s equity analyst Efraim Levy, this may finally be rock bottom for the industry, but that doesn’t mean things are about to improve soon. “We believe we may be at or near the trough of the industry’s year-to-year comparisons but do not see an uptick in industry demand before fourth-quarter 2009 at the earliest.”
[Source: Automotive News]
Follow the jump for a full list of manufacturer sales numbers
Cadillac has made the move to stop selling its vehicles in half of the European countries it currently has a presence in – this according to a report in Automotive News. There is no word on exactly which of the 25 countries will be affected but two markets that are guaranteed to still carry the Cadillac brand are Russia and the U.K.
The news comes as Cadillac’s European distributor Kroymans Import Europe faces brankruptcy. As a result a European court has decided to appoint a third party to take control of the 3,500 unsold vehicles at Kroyman’s 165 dealerships across Europe. Presumably the models will be dumped in the European markets which will retain a Cadillac presence.
The move also involves General Motors’s other U.S. brands in Europe including HUMMER and Corvette.
[Source: AutomotiveNews via AutoBlog]
Toyota loss could be as much as $1.7 BILLION dollars
Toyota Motor Corp stock decline over the past 12 months. Source www.BigCharts.com
According to Bloomberg news, Toyota will soon announce a possible dividend cut or profit loss. Following the announcement by Toyota Motor Corp. President Katsuaki Watanabe, stocks dropped (just 0.2 percent) but still remained strong.
Bloomberg sources the Nikkei English News, which doesn’t give a source, but states that Toyota may actually post an operating loss of $1.7 Billion. It would be the first loss in the company’s 71 year history.
Toyota’s US sales fell 34 percent last month.
The news also brought about some market turbulence in German where both Daimler and BMW posted three percent losses for the day.
Meanwhile, Lamborghini has announced that even the ultra-rich are not free from the economic woes. While they do expect to post another record sales year, production will be slowed as the company will add an additional eight days to its Christmas brake.
Exotic car manufacturers, it should be noted, are in a unique position during such dire financial times as they rely on a pre-ordering process with lengthy wait times for customers. This means that sales of 2009 vehicles more accurately represent the 2007 marketplace as orders would have to have been placed much earlier. The advantage for companies like Lamborghini or Ferrari is that this system gives them a significant amount of time to react to an economic downturn.
Official Toyota Sales figures after the jump: