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Are increased luxury car sales an indication that the economy is heading upward? Or is the economy improving only for that “villainous” 1% of wealthy Americans who have so many young Americans occupying urban parks and squares these days?
It’s a complicated picture, with lots of moving parts.
What can be substantiated is that luxury car companies are doing a great job of promoting their brands to their target audiences, and that middle-class consumers don’t have either the faith or the cash that affluent consumers have in the U.S. economy.
Let’s start with the Italian luxury carmaker Ferrari, which just posted a 13% rise in car sales for the last quarter, including a 16% hike in U.S. Ferrari sales.
The high-end automaker says the sales jump was fueled by “strong sales” in the U.S., the U.K. and Germany – three Western countries either back in recession (Great Britain) or showing growing pains in their comebacks from the crash (the U.S. and Germany).
In the U.K., at least, the Ferrari saga really is a case of the “haves” versus the “have not’s”. According to the carmaker, 177 new Ferraris were shipped to Great Britain in the same quarter that the country officially slid back into recession.
But an even closer look reveals that Ferrari shows the bang-up job the company is doing pushing its brand out on the internet and on social media sites. In a statement, Ferrari says it has over eight million friends on Facebook, and about one million on Google+. These are staggering amounts for any Fortune 500 company, let alone a specialty luxury car manufacturer.
The outside data backs Ferrari up on the brand issue, and may help explain why its quarterly numbers are so good at a time when most consumers are battening down the hatches. Seattle-based Simply Measured says Ferrari is among the top three on its list of 100 “top brands” on Google+, which enables consumers to share experiences among one another.
So Ferrari is nailing its target audience via social media, but does that mean consumers can take solace in stronger luxury auto sales in early 2012?
Hardly. The Bloomberg Consumer Comfort Index shows that U.S. consumers aren’t buying into a stronger economy, no matter how many Ferraris the company sells in California.
The Bloomberg Index is at its lowest levels since January 2011 and has fallen to a level that Bloomberg categorizes as being near a “recession or its aftermath.”
In two words, Bloomberg cites “household spending” as the underlying problem among U.S. consumers.
“The lagged impact of rising food and fuel prices early in 2012 and a slower pace of hiring amid a decelerating economy are the likely culprits behind the near reversal of gains in consumer comfort observed through the first quarter,” said Joseph Brusuelas, a senior economist at Bloomberg. “The ability of the household to reassert its place as the primary driver of growth during the current business cycle remains limited due to modest job growth and incomes.”
Drawing conclusions is always a risky proposition, but it’s increasingly apparent that luxury vehicle makers are selling more vehicles, leveraging social media to engage their best customers, and doing so in what looks like a deteriorating economic landscape for the middle class.
How severe that landscape turns out to be remains up in the air, but it looks like regular consumers are eating dust.
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