Luxury cars back in vogue with US buyers

Trader Craig Poler couldn't hold out any longer. Browsing at a dealership in Greenwich, Connecticut, he spotted the US$130,000 ($190,000) Aston Martin Vantage Coupe he had been dreaming about for months.

"The second I saw it I knew I was going to buy it," said Poler, 48, who trades oil and petroleum products.

"I've wanted one for a long time, since I started seeing them in London when I went on business."

Super-luxury cars, whose sales plunged after Lehman Brothers' collapse and the ensuing financial crisis, are making a comeback.

Fiat's Maserati and Ferrari brands, Bayerische Motoren Werke's Rolls-Royce and Daimler's Maybach are moving out of the lots again as taboos over conspicuous consumption fade with the recovering economy.

US sales this year of cars priced at more than US$100,000 may jump 42 per cent after falling 30 per cent last year, according to automotive industry researcher IHS Global Insight.

US gross domestic product has expanded on average 3.7 per cent a quarter since the middle of last year after the biggest economic slump since the Great Depression.

Demand for the most expensive car models plummeted in the autumn of 2008 after the bankruptcy of Lehman Brothers and the arrest of Bernard Madoff for a US$50 billion pyramid scheme, the largest investment fraud in history, set in motion a financial crisis that prompted wealthy consumers to rein in spending.

"It was poor taste to be flashing greenbacks around," said Rebecca Lindland, an IHS Global Insight analyst in Lexington, Massachusetts. "You don't think of this segment as having pent-up demand, but there is. These buyers are people that need to be the first ones on the block to have the latest model."

The US is the largest market for the most expensive luxury cars, often referred to as supercars. A rebound in stocks and bonuses has revived demand for such vehicles.

The US stock market posted its biggest gains last year since the 1930s and bank earnings soared, including record profits at Goldman Sachs Group, leading to bigger bonuses.

Average compensation and benefits at Goldman Sachs last year was US$498,246 a person compared with US$316,928 a year earlier.

Lindland estimates Rolls-Royce will increase US sales almost 20 per cent this year on demand for the new Ghost, which is 43cm shorter and nearly 270kg lighter than the Phantom.

Other models in demand are Maserati's GranCabrio convertible and Aston Martin's US$198,000 Rapide.

"These are very emotional vehicles," said Jeremy Anwyl, who runs the automotive website Edmunds.com. "The people who were holding back had money, but needed a good reason to buy."

Waiting lists for Ferrari Californias and 458s are growing again, said Richard Koppelman from the Miller Motorcars dealership, explaining he's sold out of the 458 and has a waiting list of 180 people.

"People are saying that things didn't get as bad as they could have been," Koppelman said. "Earnings are good on Wall St. People are getting tired of doing without and are saying, 'Why not?' Demand is strengthening."

Daimler, which makes the Maybach, the 1930s-era ultra-luxury brand reintroduced by the German carmaker in 2002, expects premium demand to improve faster than the rest of the car market, chief executive Dieter Zetsche said.

The Maybach was updated this year with a new grille and a more powerful 12-cylinder engine. The updated version also includes seats that can be adorned with Swarovski crystal and an optional perfume atomiser in the rear compartment. Maybach models, whose owners include Donald Trump and Madonna, start at US$358,000. The brand delivered 200 vehicles last year.

Still, the revival in luxury vehicles is spotty, Edmunds' Anwyl said. Buyers are enticed by the newest models, while older ones, such as the Continental from Volkswagen's Bentley brand, which starts at US$177,600, are being sold with the help of incentives of as much as US$30,000, he said.

"The US market is still very challenging," said Annette Koch, a spokeswoman at Bentley Motors. "We would expect to see some growth this year, yet a modest growth."

Rolls-Royce sales are up 50 per cent in the US so far this year thanks to the new Ghost, which was introduced at the Frankfurt auto show in September, said Paul Ferraiolo, Rolls-Royce chief for North America.

Priced at US$245,000, it's about 55 per cent cheaper than Rolls-Royce's most expensive model, the Phantom Drophead.

"It's all about the product," Ferraiolo said. "The Phantom is like the tuxedo you put on for special occasions. The Ghost is like the business suit you can wear to work."

Others are still reluctant to splash out. Tim Leuliette, executive chairman of Dura Automotive Systems in Rochester Hills, Michigan, already owns an Audi R8 coupe and is considering the new R10, which sells for US$175,000.

"I feel a little guilty, so I'm not sure yet," he said, adding that he's heard of at least one super-luxury car, a Bentley Flying Spur, that was scratched along its sides by someone with car keys while the car was parked in Birmingham, a Detroit suburb.

Poler, who chose a "deep, dark grey" 2010 Aston Martin Vantage Coupe, said although consumption isn't back to where it was three years ago, people are less reluctant to splash out on expensive cars.

"Some people were affected by the recession and others weren't going to buck the trends in their social circles," he said of the cutbacks. "Up until about six months ago you were an a-hole if you bought fancy toys."

- BLOOMBERG