Dave Mulder, of Morrie's Luxury Auto, stands in their showroom in Minnetonka, Minn., Dec. 28, 2013. As stocks rise and the economy grows, buyers are shedding whatever self-restraint they had during the recession by entering showrooms and leaving with trophy cars. (Ben Garvin/The New York Times)
A Maserati on display in the Collection Auto Group showroom in North Olmsted, Ohio, Dec. 28, 2013. The company is opening dealerships around the United States, buoyed by a growing economy and soaring stock market that is inspiring buyers to enter showrooms and leave with trophy cars. (Ben Garvin/The New York Times)
Kevin Finley, digital marketing specialist at Morrie's Luxury Auto, polishes a Bentley Continental GTC V8, priced at $226,000, at their in-house studio in Minnetonka, Minn., on Saturday, December 28, 2013. As stocks rise and the economy grows, buyers are shedding whatever self-restraint they had during the recession by entering showrooms and leaving with trophy cars.(Ben Garvin for the Times)
High rollers head for auto showrooms in a buying mood
- Article by: JACLYN TROP
- New York Times
- January 2, 2014 - 9:12 PM
DETROIT – Matt Hlavin, an entrepreneur in Cleveland who owns seven businesses, mostly in manufacturing, bought three Mercedeses last year: a $237,000 SLS AMG and a $165,000 S63 AMG for him, and a $97,000 GL550 sport-utility vehicle for his wife.
“I look at it as, I don’t have a boat,” Hlavin said. “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.
“Luxury is not a dirty word anymore,” said Robert Ross, an automotive consultant with 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 even such mainstream luxury automakers 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, have risen 8.4 percent from January through November.
Maserati has led the way, with a 55 percent sales increase in 2013, followed by double-digit gains from Rolls-Royce, Jaguar, Lamborghini, Porsche and Bentley, according to figures from the Autodata Corp. Many of these brands sold more cars in the first 11 months of 2013 than they did in 2007 before the recession.
Among the hungriest consumers for luxury automobiles are entrepreneurs amassing new wealth in industries like 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,” said Ken Gorin, chief executive and president of the Collection 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 said. “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 94 percent from the depths of the recession in 2009, Gorin said.
Time feels right, buyers say
Top-end buyers say the time feels right for a big-ticket purchase. And dealers across the country say that a majority of these purchases, especially for 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,” said Steve Seidman, a radiologist from West Bloomfield, Mich., who bought a Tesla Model S electric sedan last February. “I’m not really confident in the economy, but I’m comfortable in the direction it’s going in.”
Tesla buyers including Seidman are spending well beyond the $70,000 Model S base price by getting a larger battery pack as well as other options, including upgraded interior and technology packages, that can move the price to six figures.
“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,’ ” said Stephanie Brinley, an analyst with IHS Automotive.
Enthusiasm for luxury nameplates is also unfolding beyond areas of concentrated wealth such as New York and Southern California. Outside of Minneapolis, for example, Morrie’s Luxury Auto received 16 of Maserati’s Ghibli sedans two days before Christmas and had two left on Dec. 26.
Morrie’s is also selling two to four Bentleys a month at an average price of $225,000. About 40 percent of those sales are to companies that use them to transport clients and executives, the dealership said. It has benefited from the rising fortunes of large public companies in the area like 3M, Target and General Mills.
During the recession, “we were lucky to get one out a month,” said Kenny Reller, a manager at the dealership.
A dealer near Cleveland, the Collection Auto Group, which owns 28 dealerships, including Porsche, Lotus, Maserati and Aston Martin, added Rolls-Royce last month, becoming the automaker’s 35th dealership in the United States.
“Cleveland is in a renaissance,” said Bernie Moreno, president of the dealership. “We call it the three Ms: medical, manufacturing and media.”
Rolls-Royce, which is owned by BMW, has bounced back since 2008, recovering in 2009 with the introduction of the Ghost, a smaller sedan with an average price above $300,000. The Ghost gave those interested in owning a Rolls-Royce an alternative to the Phantom, which has a base price of $402,940 and is designed for use with a chauffeur.
In October, with the company on its way to its fourth consecutive year of record sales, the automaker began selling its third model, the Wraith, a performance car with an average retail price of $340,000.
Eric Shepherd, Rolls-Royce’s president for North America, said that for many potential buyers in the six-figure market, the barrier to buying wasn’t an issue of dollars but of cultural sentiment.
“Our customers never lost the ability to buy,” he said. “They may have lost the appropriateness to buy.”
© 2014 Star Tribune