Luxury auto sector: Crisis, what crisis?

20th September 2009, Comments 0 comments

The model was a hit, with lovers of powerful cars pressing around it before heading to the Maseratis, Aston Martins and Lamborghinis on display elsewhere with female models often planted next to them.

Frankfurt -- Auto manufacturers are laying on the luxury at the Frankfurt motor show despite the industry crisis, with one example being a new blood red Mercedes with 571 horses under the hood and gull-wing doors.

The SLS AMG roadster, which harks back to the mythical 1950s-era Mercedes 300 SL, will cost a princely 177,000 euros (260,000 dollars) for those who want one when they go on sale next year.

It was designed before the auto sector hit one of its worst crises ever, AMG boss Volker Mornhinweg stressed.

AMG is the very high-end specialist unit for auto giant Daimler whose boss Dieter Zetsche stressed that "there are also cars that you only want to drive for one reason -- To feel the fascination."

The model was a hit last week, with lovers of powerful cars pressing around it before heading to the Maseratis, Aston Martins and Lamborghinis on display elsewhere with female models often planted next to them.

"These projects were created five, six or seven years ago when the economy was booming, when we thought personal wealth was a stable segment," IHS Global Insight auto analyst Christoph Stuermer told AFP.

When the crisis erupted it was too late to change.

Some models are "anachronistic," Stuermer said, pointing to Porsche which is launching a four-door Panamera model and the new Rolls-Royce Ghost that will cost more than 200,000 euros.

"It costs more to eliminate a prgramme than to continue it," noted Ferdinand Dudenhoeffer, a professor at the university in Duisburg-Essen.

All the new luxury models are supercharged, super luxurious and seem to come from a different era.

They range from Bentley's new Mulsanne to Jaguars or the latest Ferrari F458, which zips from zero to 100 kilometers per hour (60 miles per hour) in 3.4 seconds and can hit 325 kilometres with a seven-speed gearbox derived from Formula One racing.

It also spews out 307 grams of carbon dioxide for every kilometer travelled meanwhile, almost triple the European Union target of 120 grams.

Although auto manufacturers have been forced by the global crisis to focus ever more closely on small cars that cost and pollute less, the luxury market remains a hotly contested niche.

"It is not the golden age but some people dare again to display their wealth" a year after the collapse of the US investment bank Lehman Brothers, Stuermer noted.

"The luxury segment will rebound faster than that for normal consumers," Dudenhoeffer told AFP.

While normal workers will not get big raises and unemployment is expected to keep climbing next year, "investment bankers will make big gains, in particular with mergers and acquisitions," he said.

High net worth individuals in China, the Gulf and Russia will underpin that segment of the market, experts say.

But even the luxury segment cannot be completely divorced from the greening movement seen just about everywhere at the auto show.

Many companies have sought to reduce the weight of their limousines and the fuel consumption of their rockets.

Porsche, which many say lags behind in environmental innovation, has begun to develop petrol-electric hybrids, including a version of its Cayenne sports utility vehicle that is to be sold next year.

Wolfgang Duerheimer, head of research and development at Porsche, acknowledged it was "rather new" for Porsche to take that route.

And as soon as he had expounded on the merits of the new SLS AMG, the head of Daimler quickly pledged to have an all electric version by 2013.


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