Luxury cars: extravagance has passed the crisis

While sales have collapsed during the pandemic, customers have flocked to dealerships to indulge in a life-rage outside the tunnel.

Luxury cars: extravagance has passed the crisis
Luxury cars: extravagance has passed the crisis

The luxury car of 2022

The major notion of this summer, when the brakes on consumption put in place since March 2020 will be progressively loosened, is catching up on lost time, recovering the zest for life, getting out, escaping. Those who care about the notion of changing automobiles are moving forward without delay. 

Of course, the affluent have realized their pre-pandemic dreams, as purchasing a new automobile is no longer a requirement.

However, following the Great Depression and a precipitous drop in sales, the automobile, particularly luxury and sports cars, is on the mend. From Lamborghinis priced at 200,000 euros to Ferrari's record orders, rolls that debut a car with yacht lines and a picnic function shown at an outrageous price... Luxury automobiles soon recovered from the Covid-19-induced catastrophe.

With their confidential production and well-to-do customers, « these brands usually emerge unscathed from crises, but there they have posted double-digit sales declines », explains Felipe Munoz, expert for the firm Jato Dynamics. 

However, by the fourth quarter of 2020, the situation had substantially improved. « It was not a problem of money, it was just that buyers were stuck at home. They postponed their » purchases, Munoz says.

Luxury brands have thus coped better with the shocks of the year 2020 than most generalist brands.

« Luxury continues to have very distinct codes and customers, » says Deloitte's Guillaume Cruelly. « We're dealing with behaviors that are more related to personal situations, to changes in assets, than to market trends. »

$13 million for a picnic

"There is a lot of money waiting to be spent," Rolls-Royce CEO Torsten Muller-Otvos said in an interview with AFP. « I was struck by the number of clients who informed us that after using the Covid, they realized they may die tomorrow and that now is the time to live. »

  • The British firm unveiled a highly special model on Thursday, with a back that resembles the contours of a boat. 
  • Only three units have been designed thus far. 
  • According to Rolls-CEO, Royce's "we never discuss about costs in negotiations with our" clients. 
  • We can assume that « the Boat Tail considerably more sophisticated » is much more costly based on claims that [the last comparable model] Sweptail cost $13 million. 
  • Especially since it is expected to become a rare collector car due to its extremely restricted production run, a new trend noted by luxury experts.

Owing to a brief suspension of its operations and the postponement of some expenditures due to the crisis, Ferrari's sales decreased by 10% in 2020, with 9,119 vehicles sold. The SF90 Stradale, the company's first rechargeable hybrid sports vehicle, sold for just under 450,000 euros, and the Monza, a two-seater without a windshield valued at 1.7 million euros and produced in a very limited run, resurrected the horse in the start of 2021.

Ferrari now has an « order book at a » record level, its management indicated in early May. The last luxury brand not to offer an SUV, it hopes to pass the 10,000 sales mark with its Purosangue » « planned for 2022.

The massive Urus SUV (about 200,000 euros) from Lamborghini has improved sales since its introduction in 2018 by introducing a new product line to its range: 7,430 cars sold globally in 2020, with the Volkswagen group bettering its 2019 record.

In recent years, « luxury brands have become sensitive to major automotive trends, with SUVization and electrification of » ranges, points out Guillaume Crunelle.

In 2020, sports cars accounted for only 5% of the luxury market, and SUVs surpassed sedans in market share for the first time, according to Jato.

The Empowerment of China's Billionaires

However, Bentley and McLaren in the United Kingdom responded to the situation by laying off thousands of staff at the outset of the epidemic. But Bentley (Volkswagen Group) ended up recording an all-time sales record over the year with more than 11,000 vehicles sold, boosted by the sales of the Bentayga SUV (just under 200,000 euros).

Rolls-Royce was also "hard hit" in 2020, but the business has made a stunning return, reporting the "best quarter in its 116 years" in early 2021, with "strong" demand for its star-studded New Ghost car and 2.6-ton Cullinan SUV (read our essay).

« This year's production is already fully reserved », said Mr. Muller-Otvos.

Just as badly hit in 2020, McLaren is relying on its hybrid supercar, the Artura (230,000 euros) to get back on track. With the DBX SUV, Aston Martin, which was spared from bankruptcy in early 2020, saw sales climb in the first quarter of 2021.

All of these high-end brands do well in Europe and North America, but sales in China have accelerated.

« It is the first area of wealth accumulation in the world, and the car continues to be an extremely strong social discriminant », explains Guillaume Crunelle.

« Unlike the rest of the world, China's economy has not been stalled for months, » says Felipe Munoz. « This tendency is expected to continue as more millionaires and billionaires emerge each year. »

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