Falling Wall Street Bonuses Will Hurt Luxury-Car Sales
There are going to be fewer Bentleys, Ferraris, Lamborghinis, Maseratis, Mercedes-Benzes, Porsches and Rolls-Royces under the Christmas tree this year, with Wall Street bonuses taking a beating in the present financial industry shakeout.
New York Governor David Paterson said in July Wall Street bonuses would fall an estimated 20 percent this year, and that was before Lehman Brothers declared Chapter 11 bankruptcy, on Sept. 15.
There’s a lot of money at stake, just in bonuses alone, never mind the ripple effect. New York State Comptroller Thomas DiNapoli said in January 2008 that the securities industry paid out $33.2 billion in bonuses in 2007, an average of $180,420 per recipient. That’s right, an average of $180,420 per recipient.
A lot of that money ends up in luxury cars, but this year? Maybe not so much. Through July, Bentley North American retail sales were already down 26.8 percent from the year-ago period, to 1,945. U.S. sales are up so far this year for rival Rolls-Royce, but the disaster on Wall Street is bound to have a chilling effect on year-end sales.
Besides New York and the surrounding area, London and its suburbs will also experience the fallout.
In a July 30 conference call announcing second-quarter earnings, Penske Automotive Group Chairman Roger Penske said that in the United Kingdom, some of the dealership group’s wealthy customers had already canceled their orders for high-end luxury cars.
For now, Ferrari and Maserati say they still have waiting lists in the U.S. market. But I bet some names will quietly disappear.
Jim Henry has been writing about the auto industry from a business perspective for more than 20 years. He is also a member and past president of the New York-based International Motor Press Association.
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