No rebound in premium car market despite better economy

[Ithunk]

AN EXPECTED rebound in demand for premium cars as the economy recovers has not materialised. In fact, some distributors of high-end makes say that the market has softened instead.

 

'When the good news about the global economy began trickling in from July and August, we expected demand to strengthen and the momentum to build up,' said the boss of a small luxury dealership. 'But that didn't carry through to the end of the year.'

 

In fact, the last three or four months of this year were unusually quiet. Together with a cut in the number of certificates of entitlement available, the overall luxury segment shrank every quarter in 2009 compared with a year earlier.

 

This segment includes Mercedes-Benz, BMW, Audi, Porsche, Jaguar, Volvo and Mini but excludes super luxury brands such as Lamborghini, Ferrari and Bentley.

 

New car registrations in Q3 this year numbered 2,315 - down 17.3 per cent from Q3 2008. Quarterly registrations are taken to even out any stock and delivery fluctuations.

 

'Sales of most luxury brands are trending down. They are definitely not as strong as in the middle of this year,' said the general manager of a mid-size luxury dealership.

 

The overall market is expected to shrink more than a quarter as a result of the cut in the COE quota, and only a couple of premium makes will be in positive territory. One of them is Audi, whose aggressive marketing efforts and strong model line-up have reaped dividends.

 

'We have achieved our target and will have a 9 per cent increase year on year to about 1,420 to 1,450 cars in 2009,' said Audi Singapore managing director Reinhold Carl. 'We have had quarterly increases this year. Only January was a very poor month because that was the depth of the crisis.'

 

Mr Carl said that demand for Audi cars remains high and delivery times for some popular models have stretched until March. 'We have nothing to complain about,' he said with a laugh.

 

But sales of other premium brands could drop more than the market average. For some, only their cheaper entry-level models are currently doing any business.

 

'The low-end is okay, but the high-end has come to a stop - unless you have a new product,' said the sales manager of a popular luxury brand. 'It is the same with expensive watches. It's like someone pulled the hand-brake in November.'

 

He blamed this largely on the absence of a year-end bonus for civil servants.

 

'The general public takes the cue from there. Suddenly, reality sets in,' he said. 'You may be in senior management but you realise there is not going to be any extra money to spend, so you are not in a mood to buy. You are not poor, but you are feeling poor, so you pull back.'

 

But since the bonus announcement was relatively recent, a sportscar distributor reckons that the poor sentiment is a result of economic uncertainty. And a lack of confidence isn't conducive to the purchase of high-end products, which are often impulse buys.

 

'Many of my customers are businessmen who own SMEs,' said the distributor. 'If the general market is not doing well, then they are not doing well - and so they won't be buying a new car. There is a knock-on effect.'

 

But one interesting result of the bad economy this year is that more people seem to be going away on holiday.

 

'Some people tell me they have given up on 2009 and just want to get it over with,' said the distributor. 'So this December, it seems that fewer are chasing targets for better year-end results - and more are taking a break.'

 

As for when he expects the slump to end for the luxury business, he said: 'The government says the economy will grow 5 per cent next year, but unless your company announces a salary increment, it won't make you more confident. I think this segment will be affected until at least Q1 next year.'

 

source

http://motoring.asiaone.com/Motoring/News/...226-188115.html