If the Joneses are broke, do car buyers still try to keep up with them?
There was an interesting story on NPR this week about how luxury cars are making a comeback at the Detroit Auto Show:
Sales are also increasing for other luxury carmakers. For the past three years, the auto market was so weak Porsche didn't even attend the auto show. In 2010, sales for Porsche were up 30 percent.
Riding the big sales increase, Porsche came back to the Detroit show with new models and even introduced a brand new concept hybrid racing car.
Steve Janisse, a spokesman for Porsche, says it was more than just a bad economy that hurt the German automaker. He says it was more of a mindset that kept the wealthy from buying the company's cars.
"The ones who are buying the cars still had the capability and the capacity to buy a luxury sports car," he says. "They didn't want to be seen as the one on the block who just went and bought a new Porsche, or a new Ferrari, or a new Bentley — whatever it may be — if their neighbor just lost their job."
It was that last part that gave me whiplash. I get that this recession affected some traditionally very stable, very lucrative industries, such as law and finance, and that even the wealthy sometimes experienced or were threatened by economic instability, so that would hurt luxury car sales.
But wealthy consumers limiting their car purchases because they felt bad splurging on a luxury auto in a recession? Was there social pressure driving people to the horror of keeping their luxury cars longer than three years? More from the story:
Rebecca Lindland, an automotive analyst for IHS Global Insight, says buyers of luxury brands are trying to be more subtle.
"People are coming in and ordering the exact same car, just a new version of it ... so that people don't know that they've gotten a new car, which I thought was very symbolic," she says.
So let me get this straight: People who can afford to buy a luxury car decided not to because they felt bad about showing up their peers in a recession.
Maybe it's just that I live in Palm Beach County, where the level of conspicuous consumption never ceases to amaze, but I'm skeptical. It seems to me that people make their decisions to buy or not to buy a car based on whether they need it, whether they can afford it and whether they find the car desirable, not how it might make their neighbors feel. I'm going to need more than a vague anecdote to believe otherwise.
Help me out here, wealthy readers. Does this actually happen?