Wealthy elite keep buying flashy cars

Rolls-Royce and Bentley both recently announced significant increases in international sales of their cars. Rolls-Royce improved its 2012 sales to an annual record of 3,575 units, while Bentley grew 22% to 8,510.

In SA, luxury brands generally are reporting strong demand for their products - though, with the exception of Porsche and Maserati which report their monthly sales, companies in this sector are generally coy about the number of cars they sell.

What is clear, however, is that the shift of economic power is good business. Paolo Fra, Bentley brand manager for importer Pearl Automotive, says there has been a significant change in the customer profile. "In the past two years our average buyer has moved from a white aged between 55 and 65 to black aged people aged between 38 and 45."

Women are also coming into the market in increasing numbers. At Bentley, they account for one-in-ten customers. They are even making inroads at the ultimate testosterone brand, Ferrari.

"The number of women buying our cars has definitely increased over the past three years," says Jan Ungerer, chief operating officer at importer Viglietti Motors.

He and Fra agree that the new target markets offer great potential.

"There remains some opportunity for luxury brands," says Ungerer but Fra is more bullish and says that from Bentley's perspective the emerging market is hugely untapped.

"Our target is to double sales this year and I think the market potential is five times bigger than that," Fra said.

Clifford Joffe, head of sales at the Daytona motor group, which imports Rolls-Royce, Aston Martin and McLaren, says that potential extends beyond SA's borders.

"We are not suggesting that Africa is about to experience an economic renaissance in the immediate future but luxury brand manufacturers are poised to tap into the African potential."

It requires considerable personal wealth to get into this market: the deposit on a new Bentley Continental is about R1m, with the remaining R2m or so due before delivery. Like Rolls-Royce, most cars are built to order, allowing customers to have them designed for them with personalised colours and interior-design specifications.

But brand executives disagree with the idea that this sector is recession-proof - that the millionaires and billionaires who buy their cars are immune to normal economic cycles.

Sales dipped

They point out that local sales of most luxury brands dipped in SA after 2008 at the same time as the rest of the car market declined. Also,the introduction of the National Credit Act, made it harder for banks to lend money, also had an effect on sales.

Joffe says: "Nothing is recession-proof. You just have to align your business to be able to cope with demand."

The biggest change may be in the way buyers use their cars. It could be considered distasteful to flaunt one's wealth at a time when many of SA's population are out of work and living in poverty. Ungerer speaks for any brand when he says: "Most Ferrari owners use their vehicles over weekends only."

That doesn't seem to dampen demand. Depending on the model, waiting lists on new Ferraris range from six to 18 months.

Fra, whose company also imports Lamborghini says it is a very strong, established brand in SA.

"Buyers aren't so brash. Some prefer to take delivery of their vehicle from the workshop at the back rather than be seen driving it out of the showroom."

Joffe says driver behaviour is often dictated by Permission Ownership, whereby owners avoid sending out the wrong signals and are aware of the environment in which they operate.

"If you are a heart surgeon, driving an Aston Martin may instill a level of confidence in your patients but if you are a mine owner, you may not want to drive your luxury car to work," he says.

Fra adds that brands operating in this high-price sector are no longer mere car companies. "We don't sell cars any more. We supply lifestyles."

Source: Financial Mail via I-Net Bridge