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Monday 24 November 2008
Lukewarm Response to Discounted Luxury Cars
More price cuts on luxury cars may be on the way after an unprecedented 48-hour bargain sale on brands such as Ferrari and Rolls-Royce attracted only lukewarm reaction from high-income earners.
More price cuts on luxury cars may be on the way after an unprecedented 48-hour bargain sale on brands such as Ferrari and Rolls-Royce attracted only lukewarm reaction from high-income earners.
The sale, beginning on Saturday at midnight and ending at 8.30pm yesterday, helped Richburg Motors Trading Company sell 21 cars from its stock of 150 at discounts of up to 40 per cent, netting close to HK$10 million.
The most expensive car, a Ferrari F430, fetched about HK$2.15 million, down from the original price of HK$2.5 million.
But the result fell far behind company chief executive Eric Wong’s expected income of HK$30 million.
But Mr Wong said last night: “I’m happy with the sales ... we’ll see what promotion we may do next.”
Earlier, he said the company would hold a meeting today to consider what to do with the remaining stock. “People came and showed interest, but many hesitated at the last minute,” he said.
The company has felt the pinch since the financial crisis swept across the globe, but last month was a particularly bad one.
Latest figures from the Transport Department show the number of new vehicle registrations last month fell 23 per cent to 2,598 year on year. The figure was the second lowest since February, and down from 3,065 in September and 2,903 in August.
Michael Lee, chief executive of Mercedes-Benz’s local dealer Zung Fu, said it was difficult for them to stage such sales.
“How much concession would you consider attractive if you are buying an expensive handbag, certainly not 10 per cent or 20 per cent. You probably won’t even think about it unless it is 40 per cent off, and we simply can’t do that.”
He said the profit margin for the motor industry was much lower than for other retail products such as accessories and cosmetics.
But for parallel importers and second-hand car dealers who need space to store their stock, the cost of keeping the cars means they are prepared to sell the vehicles even if this means suffering a loss.
As of yesterday morning, the sale of 20 luxury vehicles including a Rolls-Royce, a Ferrari and a Porsche Cayman S, had brought Mr Wong HK$3 million in losses. “It’s like the last shot, after clearing the stock we can start afresh with our business,” he said.
But one of the highlights in the sale - James Bond’s classic British car, an Aston Martin Vantage with a market value of HK$1.98 million - remained unsold despite a discount of HK$600,000 when the sale ended.
Benson Wong, a dealer in second-hand luxury cars, said he had not bought a car in the past month.
“I think the problem we now face is worse than the financial crisis in 1998 and the Sars period,” he said.
Mr Wong said prices of luxury vehicles, especially sports cars, had fallen by about 25 per cent in the second-hand market over the past few months.
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Lukewarm Response to Discounted Luxury Cars
Anita Lam and Danny Mok
24 November 2008
More price cuts on luxury cars may be on the way after an unprecedented 48-hour bargain sale on brands such as Ferrari and Rolls-Royce attracted only lukewarm reaction from high-income earners.
The sale, beginning on Saturday at midnight and ending at 8.30pm yesterday, helped Richburg Motors Trading Company sell 21 cars from its stock of 150 at discounts of up to 40 per cent, netting close to HK$10 million.
The most expensive car, a Ferrari F430, fetched about HK$2.15 million, down from the original price of HK$2.5 million.
But the result fell far behind company chief executive Eric Wong’s expected income of HK$30 million.
But Mr Wong said last night: “I’m happy with the sales ... we’ll see what promotion we may do next.”
Earlier, he said the company would hold a meeting today to consider what to do with the remaining stock. “People came and showed interest, but many hesitated at the last minute,” he said.
The company has felt the pinch since the financial crisis swept across the globe, but last month was a particularly bad one.
Latest figures from the Transport Department show the number of new vehicle registrations last month fell 23 per cent to 2,598 year on year. The figure was the second lowest since February, and down from 3,065 in September and 2,903 in August.
Michael Lee, chief executive of Mercedes-Benz’s local dealer Zung Fu, said it was difficult for them to stage such sales.
“How much concession would you consider attractive if you are buying an expensive handbag, certainly not 10 per cent or 20 per cent. You probably won’t even think about it unless it is 40 per cent off, and we simply can’t do that.”
He said the profit margin for the motor industry was much lower than for other retail products such as accessories and cosmetics.
But for parallel importers and second-hand car dealers who need space to store their stock, the cost of keeping the cars means they are prepared to sell the vehicles even if this means suffering a loss.
As of yesterday morning, the sale of 20 luxury vehicles including a Rolls-Royce, a Ferrari and a Porsche Cayman S, had brought Mr Wong HK$3 million in losses. “It’s like the last shot, after clearing the stock we can start afresh with our business,” he said.
But one of the highlights in the sale - James Bond’s classic British car, an Aston Martin Vantage with a market value of HK$1.98 million - remained unsold despite a discount of HK$600,000 when the sale ended.
Benson Wong, a dealer in second-hand luxury cars, said he had not bought a car in the past month.
“I think the problem we now face is worse than the financial crisis in 1998 and the Sars period,” he said.
Mr Wong said prices of luxury vehicles, especially sports cars, had fallen by about 25 per cent in the second-hand market over the past few months.
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