Because Of This, The Luxury Car Industry Is Thriving Right Now

It Is Important To Note That The Market For Luxury Automobiles Is Experiencing An Upswing In Sales At A Time When The Cost Of Living Is On The Rise.

The Luxury Market Is Outperforming Expectations, In Spite Of Concerns About Economic Contraction And Rising Expenses Of Living. According To Data Provided By The United States Bureau Of Labor Statistics,

The Consumer Price Index For All Urban Consumers (Cpi-U) Experienced A Year-Over-Year Increase Of 0.4 Percent In September 2022 On A Baseline That Was Adjusted For Seasonal Factors.

In Addition, The Overall Price Index For All Items Increased By 8.2 Percent Before Seasonal Adjustment During The Course Of The Previous Calendar Year.

Let’s Face It: We Don’t Need Fancy Data To Comprehend That Goods Have Become Excessively Pricey As Of Late.

In Spite Of The Hard Economic Situation, People With High Incomes Continue To Buy Specialized Luxury Goods, Which In Turn Helps Improve Overall Sales For Premium Companies.

This Seems To Contradict Conventional Economic Logic. According To Mckinsey & Co., “Luxury-Vehicle Brands Stand Alone” In The Field Of Automobile Manufacturing.

According To Analysts Working For Mckinsey & Co., Who Were Quoted In An Article,

“Whereas The Mainstream Market Has Largely Stagnated, With Little To No Growth Expected Through 2031, The Luxury Segments Should Gain Share During The Same Period, With Growth Rates Ranging From 8 To 14 Percent Annually,” The Luxury Market Is Expected To Grow At Rates Ranging From 8 To 14 Percent Annually.

In Addition To This, Profit Margins In The Luxury Market Segment Varied In The Double Digits From 2016 To 2021, Whereas Profit Margins In The Mass Market Segment Stayed In The Low Single Digits Throughout This Same Time Period.

In Addition, According To The Findings Of The International Management Consulting Firm, The Four Car Brackets For Luxury Automobiles That Are Projected To Experience Compound Annual Growth Rates Ranging From 8% To 14% Through 2031 Are As Follows: $80,000 To $149,000, $150,000 To $299,000, $300,000 To $500,000, And Above $500,000.

On The Other Hand, According To The Projections Made By Mckinsey & Co., The Growth Rate Of The Market For Automobiles With Prices Lower Than $80,000 Will Be Only 1 Percent Between Now And 2031.

To Be Honest, If We Take A Look At The Earnings That The Luxury Manufacturers Made During The Third Quarter, We Can Already See How Successful They Are Becoming.

Mercedes-Benz Group Profits Increased By 83 Percent To $5.1 Billion In The Third Quarter, And The Luxury Car Manufacturer Just Informed Investors That It Anticipates Group Profits Would Increase By At Least 15 Percent In 2022.

Despite The Chip Shortage And Problems With The Supply Chain, Audi Of America Claimed That Its Third-Quarter Sales Increased By Twenty Percent Year-Over-Year To Reach 49,267 Deliveries.

So, What Factors Contribute To An Increase In Demand For Luxury Cars?

Increase In The Super-Rich And The Henrys

According To A Survey By Credit Suisse, The Number Of “Ultra-High Net Worth Individuals,” Or People Who Have More Than $50 Million In Assets, Has Increased By 50 Percent Around The Globe.

In Addition, 30,000 Additional People Joined The Ranks Of The Ultra-Affluent Class In The United States In The Year 2021.

There Are 141,135 Ultra-High-Net-Worth Persons Living In The United States, Each Of Whom Possesses A Net Worth That Is At Least $50 Million. But The Class Of Really Wealthy People Isn’t The Only One That’s Expanding.

In Fact, Recent Studies Have Shown That There Is A Growing Segment Of Luxury Buyers Known As “Henrys” (High Earners, Not Rich Yet), Who Are Also Referred To As “The Working Rich.”

Those That Fall Into This Class Are Young Professionals Who Bring In An Annual Salary Of Between $100,000 And $250,000.

Because Henrys Are Aspirational Purchasers, Luxury Firms View Them As The Clients Of The Future And Are Therefore Working To Cultivate Loyalty Among This Demographic.

For Example, Mercedes-Benz Is Going After These Consumers With Their Entry-Level A-Class Model, While Audi Is Doing The Same With Its A3 And A4 Models.

Automakers Are Aware That If Customers Are Satisfied With Their Vehicles And The Level Of Maintenance They Receive, They Will Continue To Purchase More Expensive Models As They Progress Up The Income Range And Become Loyalists To The Automaker’s Brand.

In General, The Customer Segments That Buy Luxury Automobiles Are Constantly Expanding, And As A Result, It Is Only Logical That Manufacturers Are Concentrating On These Consumers And The Wants And Demands That They Have.

For Automakers, The Asia-Pacific Region Offers New Opportunities

It’s Not Just The Market In The United States That’s Doing Exceptionally Well Right Now. In Point Of Fact, Luxury Automobile Manufacturers Have Their Sights Set On Another Profitable Market: The Asia-Pacific Region.

After China Overcame Its Stringent Lockdown And Covid-19 Restrictions, The Country’s Auto Industry, For Example, Made A Significant Return In The Third Quarter Of This Year.

The Volume Of Passenger Vehicles (Pv) Sold At Retail Increased By 23 Percent Year-Over-Year, While The Number Of Wholesale Deliveries Increased By 37 Percent In The Third Quarter.

According To Fitch Ratings, The Share Of Electric Vehicles (Evs) In China’s Pv Market Increased From 19 Percent In 2021 To 28 Percent In The Third Quarter Of 2022. Nevertheless, This Booming Market Is By No Means The Only One In The Region.

Following The Covid-19 Crisis, An Uptick In Automobile Sales Can Also Be Seen In Japan, Which Holds The Position Of The World’s Third-Largest Car Market.

For Example, The Car Of Automobiles Sold In Japan Increased By 24.1 Percent During The Month Of September 2022, Reaching 394,290 Units Total.

According To Focus2move, The Regional Powerhouse Subaru Reported Outstanding Growth Of 71.5 Percent Over This Time Period.

In Other News, India Also Had A Great Month In September 2022, With Around 3,54,702 Passenger Cars Selling In The Market.

This Was An Incredible Performance. When Compared To The Previous Month Of September, Sales In India Increased By More Than 89 Percent.

Mercedes-Benz India, Meanwhile, Reported Having Its Best Retail Period Ever, With 11,469 Cars Sold In The First Nine Months Of 2022. This Equates To A Gain Of 28 Percent When Compared To The Previous Year For The Premium Car Manufacturer.

Leave a Comment