Ferrari Mailing List: Yes, People Buy Ferraris in a Recession [Today's WSJ]

[Larry B (larrybard]

Yes, People Buy Ferraris in a Recession 

By JOSEPH B. WHITE

  
This is a tough time for the very wealthy. Stocks are seesawing. The credit 
markets are as liquid as a frozen daiquiri. Rage against big Wall Street 
bonuses has lately taken up much space on Washington's political menu, right 
alongside proposals to collect more taxes on the top 1% of the American income 
pyramid.
 
Despite all this, the makers of ultra-luxury cars -- vehicles priced above 
$100,000 -- still believe in the American dream. Sure, they have hunkered down 
and cut production, and some have scaled back certain marketing activities, 
such as displaying cars at big auto shows. But they aren't giving up on the 
U.S. market, and, indeed, some see reasons to be optimistic that a recovery in 
demand could come sooner than some expect.
 
"Even within the last few weeks, we have seen the optimism of spring," says 
Marti Eulberg, president of Maserati SpA's North American sales arm. "We are 
starting to see that in the showrooms." Maserati won't have a display at the 
New York Auto Show next week. But it will invite potential buyers to see its 
newest model, the Quattroporte GranTurismo S, at its Park Avenue showroom.
 
Bentley, one of the super-luxury brands owned by Volkswagen AG, plans to roll 
out four new models by the end of this year: A GTC Speed, the Azure T, a 
flex-fuel model called the Continental SuperSports and a "Final Series" version 
of its big, top-of-the-line sedan, the Arnage. The SuperSports, designed to run 
on either gasoline or biofuels, will be on view at the New York Auto Show.
 
The flex-fuel Bentley is a nod to the possibility that in the future, an 
important slice of individuals with the means to buy super-luxury cars will 
want those cars to be green. Tesla Motors Ltd., which sells a $100,000 electric 
roadster and last week unveiled a prototype for a $50,000-plus electric sedan, 
and Fisker Automotive, which is soliciting deposits for its hybrid-electric 
Karma sports car, are pushing hard to break the segment's old formula: that 
super-sized prices needed to be justified by super-sized horsepower.
 
Bentley just opened a new dealership in Austin, Texas, and Christophe George, 
Bentley's chief operating officer in North America, was out in Napa Valley last 
week launching the GTC Speed, a 600-horsepower, 12-cylinder convertible.
 
Mr. George isn't giddy about the current market. Bentley sales last year were 
down 24% world-wide, and off 32% in the U.S. He says it's too early to make a 
forecast for this year. But long term, he says, "the potential for sales is 
there."
 
"Millions of people have more than $30 million in net worth" world-wide, Mr. 
George says. What's lacking now isn't the means to buy a Bentley Continental 
GT, which goes for about $200,000 new, he says. "What we are currently lacking 
is confidence in the marketplace."
 
At Ferrari SpA, North American chief Maurizio Parlato says the company is 
taking a "conservative approach" to the current year, and emphasizing Ferrari's 
value as an investment-grade product. "Our cars keep their value," he says. 
"You put money in the market, and you have no money."
 
Ferrari is launching a new model, the California, in June. A limited-edition 
model called the Scuderia Spider 16M is already sold out, Mr. Parlato says. 
Ferrari plans to build only 499 of the 510hp Scuderia convertibles. If you 
Google the car, you'll see it has attracted more than one million searches. Mr. 
Parlato says Ferrari is flying some of the cars to eager buyers.
 
The super-luxury car market doesn't operate by the same rules as the mass 
market, of course. All together, brands such as Maserati, Ferrari, Lamborghini 
and Bentley sell in a year what Ford Motor Co. or Toyota Motor Corp. dealers 
sell during one or two bad days. Mass-market brands talk about building 
relationships with customers. The senior executives of ultra-luxury brands know 
the names of many customers.
 
Ms. Eulberg looks at the paperwork for Maserati deals so she can get a detailed 
understanding of who her customers are and how they are paying for their cars. 
At Maserati's sales volumes, she can do that.
 
Worried or not, makers of ultra-expensive cars are starting to pay more 
attention to bread-and-butter issues, such as marketing pre-owned vehicles that 
need to be resold.
 
At Bentley, Mr. George says his organization has begun offering warranties and 
other programs to help its dealers sell second-hand Bentleys. "This pre-owned 
market is quite new to us," he says. The Continental GT -- which drove 
Bentley's U.S. sales from a mere 412 in 2003 to a peak of 3,990 in 2007 -- was 
launched in 2004, so there are still relatively few second-hand ones hitting 
the market.
 
For Ferrari, one benefit of the downturn has been to shrink the waiting lists 
that Mr. Parlato and his staff once had to manage. "Now we have people who want 
to own a Ferrari," he says, not people who want to snag one and flip it for 
profit to someone behind them on the list.
 
Mr. Parlato says he's not too worried about the attacks on Wall Street bonuses 
and the troubles in the financial industry. "Our customer base is not mainly 
those people," he says. "Those people are quick buyers" who favor other brands 
that don't require a waiting list.
 
"Our people," Mr. Parlato says, "have serious money."