Why Are Luxury Car Sales Growing at Record Rates — In a Recession?
The world has been mired in recession since 2008 — nowhere more so than in Europe. It might thus come as some surprise that sales of super-luxury cars are booming — nowhere more so than in Europe.
In fact, sales of Bentleys (average price around $300,000) are up 60% this year in the United Kingdom, according to a report in the Guardian newspaper. Bentley sales are also up 35% in the United States.
To put this in perspective, the US economy grew by just 2.2% in 2012. The UK economy grew even less: 0.2%, according to statistics from the International Monetary Fund.
How can sales of super-luxury cars grow at super-fast rates during a recession? The answer is simple: it’s not a recession for everyone.
The last five years have been one of the best times in human history to be rich, and an even better time to be super-rich. The plutonomy — the economy of the super-wealthy — has been growing by leaps and bounds.
Unfortunately, most of us don’t live in the plutonomy. In the realonomy where ordinary people work (or don’t work) things have been much tougher.
The difference is striking. Consider that all-American company, General Motors. According to data compiled by Automotive News, GM sales are up 10% so far this year. Not bad.
But GM famously offers a brand for every level of consumer. Chevy sales are up just 6%. Buick sales are doing better, up 23%. And Cadillac sales? You guessed it: up 37%.
[pullquote]“The greatest country, the richest country, is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land in which there are the most homesteads, freeholds — where wealth does not show such contrasts high and low, where all men have enough — a modest living— and no man is made possessor beyond the sane and beautiful necessities.”
Acura sales are outpacing Honda sales. Infiniti sales are outpacing Nissan sales. Lexus sales are outpacing Toyota sales. In fact, the only company where the mass-market brand is growing faster than the elite brand is Ford — and that’s only because Ford doesn’t separate Ford car from Ford truck sales.
Of course, it’s the more expensive trucks that are leading Ford to higher profits.
The fact is that times are not tough for everyone. Times are tough for low-income people, unemployed people, farmers, and the elderly. For high-income professionals times are pretty good.
For corporate leaders, hedge fund managers, and CEOs, happy days are here again.
The fact is that times are not tough for everyone. Times are tough for low-income people, unemployed people, farmers, and the elderly.
So the next time you hear that times are tough and belts need tightening, ask yourself who’s saying that times are tough and whose belts it is they want to tighten. Changes are it’s a highly-paid corporate lobbyist who’s saying that times are tough … and it’s someone else’s belt that needs tightening.
American national income per person is now just about back at 2007 levels. The losses of the Great Recession have been made up. In a very real sense, every American could be doing just as well as in 2007.
The reality is that America’s plutonomy is doing fabulously better than in 2007, while America’s realonomy flounders along at rock bottom. The Great Recession hasn’t meant so much the destruction of wealth as the transfer of wealth. The poor have gotten poorer and the rich have gotten richer, leaving the whole country right back where it was.
Except that the country as a whole is now even more unequal than it was in 2007.
We have to ask ourselves: how unequal should a country be? Was the America of 2007 really just too equal for our taste? Were there simply too few Bentleys on our roads in 2007?
Or was the America of 2007 already dangerously unequal — in which case the America of 2013 is even worse?
Personally, I find it hard to believe that 2007 America was a dangerously equal communist worker’s paradise. If you think that 2007 was about right, then you agree that we need to correct the country’s income distribution to bring down our grotesque level of inequality. If you agree with me that America was already grotesquely unequal in 2007, then we have that much farther to go.
Should we have a Bentley tax? Perhaps not. But we should have a seriously progressive income tax that restores some sanity to our economy and our income distribution. Until we do, America will keep moving backwards as the rich get richer and the poor get poorer.
But then, we’ve been moving backwards for forty years now. Working Americans reached their highest income levels in 1973. We have a lot of lost ground to make up. As of 2013, we haven’t even started. That more perfect union is going to be a long time coming.
ABOUT THE AUTHOR
Salvatore Babones (@sbabones) is a senior lecturer in sociology and social policy at the University of Sydney and an associate fellow at the Institute for Policy Studies (IPS). He holds both a master’s degree in statistics and a Ph.D. in sociology from the Johns Hopkins University. Before moving to Australia in 2008, he worked in financial risk management and taught sociology and statistics at several universities in the United States.
Dr. Babones is an American citizen, born in New Jersey and educated in Florida, Alabama, and Maryland.
Economic hopelessness. My brother committed suicide last July. He had just turned 60. He lost his IT job in the Great Recession in 2008. Despite hundreds of resumes being sent out, and a lifetime of IT experience, he got few interviews and no job offers. He spent down his 401(k) and when he died the only thing he owned was a beat-up car. We later found out he had a lot of credit card debt, with which he had tried to keep himself afloat. After four years of no job offers, unemployment running out, having no health insurance, etc., his dignity was shot. He had lost hope of ever working again. How I wish he had not committed suicide; how I would give anything and everything to have him back. I consider him one of the casualties of the Recession and when I read of the fat bonuses the banksters award themselves, I shake with rage that they have continued to prosper while people like my brother lost all hope and people like me lost a loved one.
Shrink the jobs, multiply the guns, and widen the gap between rich and poor so far that the American dream of equal opportunity is a sad joke.
I’m not at all surprised–and would expect the increase among 50+ men to be recession-based, given the much greater permanent unemployment in that cohort than in past recessions.
Losing your ability to provide for your family is devastating. If you’re over 50, lose your job, can’t find another, need to provide for your family and are fortunate enough to have substantial life insurance that has been in place long enough to pay off for suicide, it’s not even an irrational choice. Not the choice most people would want to make, especially when you consider the emotional impact on children, spouse, other loved ones. But being an economic provider may come first in many men’s minds.
K.R.
New Jersey
This is the first wave of people to go backward, having less than their parents. It is a shock. So it is shameful, on top of being devastating. You can’t admit that you don’t have money in this country. You’re viewed as “bad”. Let’s face it, even our Congress acts that way. People who need help (even health insurance) are seen as mooches. We just came off a decade or so of people spending well beyond their means, taking out gigantic home equity loans so they could pretend that they had money, purchase status items. Once society adjusts to the new normal– fewer opportunities, lower expectations–maybe the suicide rate will level off. Maybe people’s values will change a little bit when they see how quickly wealth can evaporate. Maybe those who govern will adjust as well, and start viewing this as a permanent change in the American way of life rather than a bump in the road.