Tough Times for Prestige Car Brands
October 28th, 2008
OK, so we are all aware the world is facing up to some difficult financial times at the moment but how does it affect the automotive industry?
Superannuation funds are at an all time low, house prices are dropping if not plummeting, mortgages are being re-financed, the aussie dollar is worth cents just like in the year 2000, cash reserves are emptying and premium car dealership entrances are getting cobwebs. The re-structuring of the luxury car tax (LCT) for Australia couldn't have come at a worse time, so much negativity was built up about purchasing a vehicle over the $57K threshold and now due to the troubles the financial and superannuation institutions are facing, buying a new set of expensive wheels is no longer near the top of the list.
Premium dealers are finding these times extremely tough to say the least. The majority of premium cars are financed or purchased through a novated lease and consumers are avoiding entering into more debt and companies are at least questioning costs, if not cutting them. So if you ever wanted a luxury car and you have enough cash this is a time you can really negotiate with the sticker price. Inside sources at a BMW dealership in Australia told PressPortal they are slashing up to $40K on new high-end cars. That saving more than covers the on-road costs and a few tasty options.
We were also told a BMW manufacturing plant in Europe may even temporarily shut down its assembly line to re-align with current vehicle demands, (a nice way of putting it). However BMW is not alone with recent news fellow luxury marque Daimler will also be suspending production at one of their plants come December even after reporting third quarter financial figures of a $213 million Euro (AUD $442 million) profit.
The recent Australian International Motor Show appears to have been a sign we are entering tough times. It was a record Australian International Motor Show, the record for the least amount of prestige car brands showing their vehicles. Alfa Romeo, Audi, Bentley, BMW, Jaguar, Land Rover, MINI, Mercedes, Rolls Royce, smart and Porsche were all no shows leaving Lexus and Volvo to show off their luxury cars to new car buyers and enthusiasts. A common answer for the prestige brands not attending the recent motor show was the inability to measure the return on investment for attending the show. As a result the FCAI are deciding whether or not it is necessary to have 2 big motor shows a year in Melbourne and Sydney, the option being discussed is to have one international motor show per year which will be rotated between Melbourne and Sydney. The announcement to move to one major show per year willl be made shortly.