January 31, 2014

News & Features

Drivers return in droves to the high-end auto market

New York Times News Service

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Well-off drivers are snatching up cars such as this $226,000 Bentley Continental GTC. (Ben Garvin / The New York Times)

Matt Hlavin, an entrepreneur in Cleveland who owns seven businesses — mostly in manufacturing — bought three Mercedes-Benzes last year: a $237,000 SLS AMG and a $165,000 S63 AMG for himself, and a $97,000 GL550 SUV for his wife.

"I look at it as, I don't have a boat," Hlavin says. "I feel confident about the economy and about my business."

A legion of buyers such as Hlavin, buoyed by a growing economy and a soaring stock market, are shedding whatever reluctance, or self-imposed restraint, they had during the recession by entering showrooms and leaving with trophy cars.

Top-selling brands
    Among brands at the high end of the market, Maserati led the way, with a 55 percent sales increase in 2013. That's followed by double-digit gains from Rolls-Royce, Jaguar, Lamborghini, Porsche and Bentley, according to figures from Autodata Corp. Many of these brands sold more cars in the first 11 months of 2013 than they did in 2007, before the recession.

"Luxury is not a dirty word anymore," says Robert Ross, an automotive consultant for Robb Report, a lifestyle magazine for wealthy readers. "In 2008, luxury was a dirty word."

Maserati is opening dealerships around the United States; Rolls-Royce just finished its most profitable year ever; and mainstream luxury automakers such as Mercedes and Jaguar are finding an eager market for their most expensive models, which push past $100,000.

The sales gains at the highest end of the market are far outstripping those in the auto industry as a whole, which, because of easier credit and pent-up demand, rose 8.4 percent from January through November.

Among the hungriest consumers for luxury autos are entrepreneurs amassing wealth in industries such as technology and energy, and executives in Fortune 500 companies whose stocks have soared along with the broader market, analysts and industry executives say.

"People were pulling back when they had to let people go," says Ken Gorin, chief executive and president of The Collection, a luxury-auto dealership in Coral Gables, Fla. "They'd come in and buy, but it would be the same color and the same model so no one knew they got a new car."

"Now it doesn't matter," Gorin says. "Yellow cars, blue cars, red cars, white cars — people are feeling better."

Sales at The Collection's Ferrari, Aston Martin, Maserati and McLaren dealerships are up 26 percent from 2012 and up 94 percent from the depths of the recession in 2009, Gorin says.

Buyers at the top end of the market say the time feels right for a big-ticket purchase. And dealers say that a majority of these purchases, especially those above $150,000, are made in cash.

"It never would have crossed my mind to spend that kind of money on a car before," says Steve Seidman, a radiologist from West Bloomfield, Mich., who bought a Tesla Model S electric sedan last year. "I'm not really confident in the economy, but I'm comfortable in the direction it's going in."

Tesla buyer, including Seidman, are spending well beyond the $70,000 Model S base price by opting for a larger battery pack and more options.

"There seems to be some enthusiasm to take some more risk and say, 'OK, it's time to buy a new car. I'm going to buy a luxury car,' " says Stephanie Brinley, an analyst with IHS Automotive. "You see people who have the ability to recover more strongly having the confidence to spend."

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