Autos

4 Explanations for Why the Rich Are Buying Supercars Like Cupcakes

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Many believe that automakers rely on lower cost, high volume vehicles to pay the bills, and that the cars aimed at the mass market are the ticket to success. But as manufacturers of high-performance super cars are finding out, business is booming — in a big way. In fact, the past three years have seen sales for six-figure supercars soar, and companies are selling them as fast as they can make them, a report from Bloomberg BusinessWeek says.

“The market for six-figure sports cars crashed in 2009, which is hardly surprising,” Bloomberg‘s Kyle Stock wrote. “More notable, however, is the speed with which it got back on track after a global economic crash.” Since 2010, the sales pace for supercars has surpassed that for total vehicle sales, often by a comfortably large margin.

Lamborghini has so far built 700 Huracan cars, which is replacing the popular Gallardo. According to the New York Times, each and every one built has been claimed. It’s a similar story with Maserati, Bugatti, Porsche, and McLaren. It’s a benefit for the parent companies too, as supercars offer a huge margin when compared to more pedestrian vehicles. Fiat made a 12.3 percent profit margin on its Ferraris and Maseratis, while its mass market cars command just 3.3 percent.

Here are four factors that might help explain why sales for these high-end exotics have been doing so well.

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1. A Bullish Stock Market

It’s interesting, though not unexpected, that wealthy consumers have a lot of their worth tied into the stock market in one way or another. As the market continues to recover to record levels since the recession, the wealthy — notably, those who were more prudent in their recession-time investments — have seen their worth soar north on the dramatic market comeback.

Others who may not have been able to afford such vehicles prior to the recession, but then used the market slides to their advantage, could also help explain the fast uptake of high-performance cars as they cash in on their investments made when the markets were depressed. When people are doing well, they like to show it, and how better to show off your new-found wealth than with a six-figure car that can be heard from numerous blocks away?

Source: http://www.realtor.com/2. Surging Home Prices Leading to Record Net Worths

These factors are closely tied in with the stock market, and like the bullish run in the stocks, home prices and net worths have also seen dramatic increases in recent years. With higher net worth comes a higher threshold for discretionary spending, and with more discretionary spending — well, you get the idea. There are those who don’t necessarily feel the need to translate their net worth into material goods like really expensive cars, but in general, the correlation between high net worth, high home values, and a stable full of super cars are commonly found hand-in-hand.

Source: Getty Images

3. More Rich People Overall

More wealthy people typically means more spending on luxury goods, so the rising number of affluent individuals is a logical explanation for a surge in sales for ultra-expensive cars. Places like Geneva, Shanghai, and the Arab Emirates have always been wealth strongholds where brands such as Ferrari, Bugatti, Koenigsegg, and Rolls-Royce could always be guaranteed to find customers, though sales are picking up globally. Forecasts by IHS Automotive estimate that supercar deliveries will jump by 14 percent by 2018 worldwide.

“The supercar segment will grow, simply because there are more and more affluent people globally,” said Juergen Pieper, an analyst with Bankhaus Metzler based in Frankfurt told BusinessWeek. “They can spend 500,000 euros on a vehicle without blinking an eye.”

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4. Supercars Are Better Than Ever Before

It sounds a little funny simply because the passage of time results in progress and advancements, but it is true overall. There have been high-performance cars for decades, but it’s arguable that the disparity between your everyday commuter and the top-shelf machines was never wider. Two hundred miles per hour is now an afterthought for these cars, and new developments in safety and technology make these cars easier to drive then ever before. You’ll still be hard-pressed trying to find a good place to let it loose outside of a track, but that doesn’t seem to be slowing anyone.