High and mighty in lean times
Shiny sports cars with six-figure price tags flood the market at a time when more people are pinching pennies.
Automobile lovers, rejoice! It's new-car season again, and this year's crop promises more for everyone - more luxury, more performance, more economy, or more comfort.Skip to next paragraph
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The most striking trend?
Call it "conspicuous acceleration."
Never in recent times have so many flashy new models debuted from historic, sports-car makers such as Aston Martin, Maserati, Lamborghini, Porsche, Mercedes-Benz - even Ford. Most of these expensive vehicles add sporty zip to luxury appointments with skyrocketing prices to boot.
There's just one problem. With the economy still in the doldrums, flash and dash seem out of place. Even those who can afford to plunk down more than $100,000 for a Ford GT - or more than $300,000 for a Porsche Carrera GT - may decide to throttle down the opulence in these staid times.
"People don't want to be seen as putting on airs; they think it's unseemly," says Robert Frank, an economist at Cornell University and author of the 1999 book, "Luxury Fever."
Fortunately, the presence of these cars raises the bar for everyone else.
At the lower end of the market, intense competition has kept automakers from raising prices much. So cars priced around $30,000 are faster, more comfortable, and more capable than ever before. And many that cost less than $20,000 are at least a lot more comfortable. (See story, left.)
The startling disconnect between the automobile showroom and the tight economy arose because of automakers' design cycles, says Daniel Pund, senior editor of Car and Driver magazine in Ann Arbor, Mich. "There's an unbelievable selection of high-end stuff. When these cars were conceived, the economy was in a much better position," he adds.
Whether the ultrarich will spend six figures for a car is an open question. But there's no question they have it to spend. In the United States, easily 1 million families have enough money to afford these cars, says Dr. Frank.
For those at the tail end of the wealthiest 1 percent of American families, a new $350,000 Porsche Carrera GT amounts to less than a year's income, Frank says.
For buyers and sellers, these cars are all about image. Those who buy them want to let others know they have the best.
"These cars are about ego," says Jim Hall, a Detroit-based auto analyst with AutoPacific, a marketing-research firm based in Tustin, Calif. "The companies doing them have made up their minds, regardless of the business case."
Ironically, one reason for the rise of these cars is the downscaling by some traditional luxury nameplates. For example: As Mercedes-Benz offers more models in the $25,000 to $35,000 price range, it reaches a wider audience. That drives some luxury buyers to seek something more exclusive, such as a $150,000 Bentley Continental GT coupe or a $357,000 Maybach limousine with reclining back seats and tray tables that look eerily similar to the first-class section of an airliner.
But for every $200,000-plus Mercedes-Benz SLR McLaren, which does zero to 60 in under four seconds, there are many more affordable do-everything cars for the masses.
For those who don't want to put on quite so many airs, Volkswagen will soon offer the $60,000 Phaeton sedan, with all the trimmings and space of a Mercedes S-class sedan, for $20,000 to $30,000 less. Even Hyundai now sells a luxury car, the XG350, for under $25,000.
But the main effect of the ultrafast play toys of the rich and famous is a revival of sports cars for the masses. Most automakers don't expect to make a ton of money with high-end sports vehicles. But they hope their joie de vivre will rub off on more plebeian stablemates on the showroom floor.
Take Ford's GT, due out next spring. The low-slung sports car is a replica of racers that won the famous 24 Hours of Le Mans three decades ago. Ford expects to produce fewer than 1,000 over the next several years, selling them for between $100,000 and $150,000.
A little rich for your wallet? The company hopes the GT will get you to pony up $30,000 or so for a new Mustang GT with some racing heritage of its own.