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How The Recession Changed The Exotic Car Business

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How The Recession Changed The Exotic Car Business

Not many industries, or even countries, escaped the recession. From 2008 to 2013, the world witnessed over 50 nations simultaneously suffering from a poor economy. Unemployment rates across North America and the European Union rose in 2008 and have since struggled to come down. Riots have erupted in many countries, most famously Greece, where the economy was toppled by inflation and the government was over taken by the people. Many private companies were forced to close, and world famous banks were lurking the government grounds for bailout money. Most industries suffered, though few more notably the automotive industry.

Chrysler and GM both filed for Chapter 11 bankruptcy, and Honda, Toyota, and Ford all experienced heavy dips in annual sales. But how did the world’s exotic car manufacturers fare when it all went down? When your customers are people with piles and piles of money, it makes sense that recessions wouldn’t hit nearly as hard as other industries. Still, they’re far from immune.

So how did exotic car manufacturers fare in the financial crisis? For starters, it’s important to define exotic cars and separate them from luxury vehicles. Luxury cars are high-end cars like Mercedes and BMWs. They’re pricey, but exotic cars are in class that is altogether different. Exotics are cars like Lamborghini, Ferrari, Aston Martin – the cream of the technological crop, and the flashiest and fastest cars that money can buy.

lambo

Lamborghini was hit pretty hard when the economy stumbled in 2008. As car fans know, the history of Lamborghini is one of the most intriguing among all exotic car manufacturers – a devoted owner on a mission to kick-start a dramatic rivalry with Ferrari. The end result was a line of exotic supercars with a distinguished look – and a heavy price tag.

The average Lamborghini costs nearly $400,000. The company sells an average of 1,800 cars a year, so when it sold over 2,400 cars in 2008; it had plenty of reason to celebrate. Even a year into the worst global depression in decades, the famous Italian brand, now owned by Audi AG, was apparently not just safe, but also widely successful.

That all changed in 2009, when sales numbers revealed a drop to approximately 1,500 sales for the year. The dangerously low sales numbers prompted CEO Stephan Winkelmann to publicly predict that poor sales figures for exotic cars would continue through 2011. He wasn’t wrong. In 2010, sales didn’t fare any better, falling to an alarming 1,300 units. It was only in 2012 that Lamborghini sales had made their way back into the 2000s.

ferrari

Another famous exotic car manufacturer, Ferrari, has had a lot of sales success over the past eight years, though it was not exempt from the dip in the exotic car market. In 2009, the ultra-famous sports car manufacturer hit a bump in the road, with the results seeing sales drop by a few points. Ferrari sold 300 fewer cars than the year before, and had to wait until 2011 for a return to form, bouncing back with 7,000 units sold.

For many, Ferrari’s sales numbers held up well during the recession, and since then have been quite impressive, selling an average of 300 more cars per year. Of all the exotic car manufacturers, Ferrari was the least affected by the global recession.

Aston Martin, the 007 of exotic car manufacturers, was simply no match for the global crisis. Following a record year in 2007 with nearly 7,000 cars sold, Aston Martin was finally ready to crack the mainstream. A steady 2008 kept the company in the black, but 2009 told a different story.

Aston Martin sold 40% fewer cars in 2009 and since then the company’s sales haven’t quite been the same. Even Lamborghini’s poor sales performance doesn’t match that of Aston Martin, given that Lamborghini has found a way out (2,083 cars sold in 2013). Despite its best efforts, Aston Martin has suffered a steady decline year over year.

Porsche, too, was not immune to the exotic car industry slowdown. One of the largest manufacturers among luxury and exotic brands, Porsche sells an average of 25,000 cars per year. 2009 was the exception, with the company bringing in only 19,000 sales – an altogether devastating drop. What’s more, the 911 Turbo never recovered, falling nearly 50% (from 2007-2010) worldwide. Thanks in large part to their lower end models such as the Cayenne and Panamera, Porsche was able to recover quickly, making 25,000 sales the following year.

Bentley

Bentley had a record year in 2007, selling over 10,000 cars. The likelihood of a repeat the following year wasn’t high, and the financial crisis ensured it did not happen. In 2008, Bentley reported just over 7,600 sales. By 2009, fewer than 4,500 were sold. The now German-owned company was forced to shut down production in England as a result of poor sales and operation costs. The shutdown, combined with very little growth in sales, led to further losses. It wasn’t until the second generation Continental GT was introduced in 2011 that sales soared back over 7,000.

Despite exotic car sales being back on the horizon as of 2011, the companies behind the flashiest exotic cars seem hesitant to leave all their eggs in one basket after being burned by the recession. Now, the luxury car market is where the action is, and companies such as Porsche, Bentley, and even Maserati have intentionally shifted from exotic to luxury for this very reason. As global demand for luxury continues, even during a recession, car manufacturers such as these have expanded their brand line to capture a wider audience, stamping cheaper cars with their exotic brand names. The strategy might just pay off, and though it could be a while before we see the likes of Lamborghini and Aston Martin introduce mainstream luxury models with lower price tags, with the uncertainty still present in the market, it could be a good move on their part.

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