Last year proved challenging both for car makers and buyers. Higher interest rates, dogged inflation and price increases on petrol and consumer goods reduced monthly budgets at home, while automotive brands fought to maintain supply chains and inventories.
Some luxury car makers escaped much of the pain, reporting record results.
In 2022, Bentley delivered 15,174 vehicles globally, up 4 per cent over 2021. Lamborghini delivered 9,233 cars worldwide, an increase of 10 per cent over the previous year. Porsche reported a 3 per cent uptick in global deliveries and record sales in North America.
Rolls-Royce’s total sales rose 8 per cent, to 6,021 cars sold last year, as growing demand in the Americas offset a decline in China. Customers of the British brand spent roughly €500,000 ($537,000) per vehicle on average, with the majority of clients owning more than one.
“Luxury sales have been growing and were up nearly 3 per cent in 2022,” said Zack Krelle, senior manager of OEM Analytics at the data firm TrueCar.
“Tesla was the breakaway sales leader in 2022, [while] the German brands have been rebuilding sales momentum and ended the year higher than 2021.”
BMW and Mercedes-Benz both faced difficult first halves, denting overall results, but their sales grew in the final months of 2022. EVs were a bright spot for both, with sales that more than doubled over 2021 levels.
High-end brands can look forward to even more success in 2023, analysts say — with all-cash deals on luxury cars expected to be more popular than they’ve been in decades, accelerating a trend that began with the Covid-19 pandemic three years ago.
“Cash was important last year and will continue to be in 2023,” said Jonathan Smoke, chief economist at Cox Automotive. “More wealthy consumers will buy with cash rather than finance in 2023.”
Stock market volatility and economic uncertainty have wealthy consumers sitting on bigger cash reserves, so they are spending more money in absolute dollars. Meanwhile, auto loan interest rates are currently hitting 20-year highs.
This trend in the luxury sector will have lingering impacts on industry profits and future consumer behaviour. All-cash purchases mean that dealerships see lower income from financing — something dealers for Genesis, Mercedes-Benz, BMW, Infiniti and Jaguar have already begun to try to combat by offering consumers aggressive lease offers, said Mr Krelle.
On the other hand, cash purchases help consumers because they bolster a vehicle’s value against the alternative of losing equity — or the difference between the value of the vehicle and the amount owed on a loan. “We expect the year ahead to be one of transition,” Mr Smoke said.