Weblog – The way to the top

No, for starters, I don’t want to turn this into a very Pikketian or politically charged article. It is a factual statement that in the past year the ten richest people on earth have collectively become an additional €354 billion richer. Furthermore, 500 new billionaires were reportedly added during the pandemic. That in itself is not very surprising, because despite the restrictive measures worldwide, the economy is running at full speed. Stock markets are high, material prices are skyrocketing and fuel prices have soared to record highs. And some take advantage of that. That’s capitalism in a nutshell.

On to the car world, starting with two British kingpins. Rolls-Royce and Bentley sent out roaring press releases about how 2021 was an all-time record year. For example, 5,586 Spirits of Ecstacy found their way to the first owner, the highest number ever in the 117-year existence of Rolls-Royce. The flying B surpassed its previous 2020 sales record by a further 31 percent, bringing the total to 14,659 cars. The drivers of these records are the Cullinan and Bentayga mastodons, with the latter accounting for 40 percent of Bentley’s total sales. Lamborghini also had a record year in Italy with 8,405 cars sold, 13 percent more than a year earlier. Ferrari has not yet released annual figures, but in the third quarter the mathematicians from Modena already reported that the brand registered double digit growth and was on its way to a record year. In short: record, record, record and record.

The chip shortage seems to have little or no effect on the above brands. The volumes are of course lower, but relatively speaking these are significant increases for each brand. How is it possible that they all produced more cars? This is probably due to the fact that there is simply an enormous margin on these top models. The new rich are eager to show off their wealth and what better way to do that than with one of the illustrious above car brands on your Instagram feed? Because of those high profit margins and the low volumes, the concerns that own the luxury brands make sure that they get the chips they need. If the microchips were on the table in a pan, the crème de la crème would be the first to scoop it up.

That is where the problem lies: the road that many manufacturers are now taking towards the top. In the pursuit of higher profit margins, the lower segments have to pay more and more often. Bas van Putten wrote about this earlier in his weblog ‘The gentrification of the A-segment’. The smallest cars are becoming more and more expensive or even disappear altogether, as has now happened with the Peugeot 107 and Citroën C1. What remains is the Aygo X, which costs a minimum of €15,995. That is no longer a friendly price. This in turn means that people are forced to seek refuge in used cars. At the top, the records are set, but in the meantime the bottom of the market has to deal with quite a bit of clearing.

In my view, that is absolutely not a desirable development. The car once made its way down the social ladder as a means of transport. That started with the mass production of the Model Model T and continued through now iconic cars such as the Volkswagen Beetle and the Citroën 2CV. Now a reverse trend seems to be slowly taking place: owning a car is again for the elite. And who benefits from that? Right, the owners of rental companies, leasing companies and car sharing platforms. In any case, there is room for the profits arising from the rental and lease income at Rolls-Royce, Bentley, Lamborghini and Ferrari.