An analysis of new car sales in January-February 2009 shows that despite a 35% drop in total sales, compared with the corresponding months of 2008, sales of luxury cars rose strongly. 782 luxury cars and jeeps were sold in January-February, 30% more than in the corresponding months of last year.
There are several possible ways to explain the contrast. There is, of course, the populist hypothesis - the rich are removed from Israeli economic reality, and that economic gaps have widened, but there are also more practical and less dramatic hypotheses.
One possible explanation is the well-known trick of pushing off sales closed in December to the following month, in order to improve delivery numbers for the next year. Industry sources estimate that 15-20% of luxury cars sales in January were actually made in the preceding month.
Another possible explanation is a sharp rise in self registration. New regulations require vehicle importers to register themselves as the owners of unsold inventory 12 months after the manufacture date. In the luxury car segment, where customers are fashion-conscious and selective, importers are often stuck with unsold stock. These cars are sent to trade-in agencies, where the cars may sit for months before they are sold. Nonetheless, these cars are recorded in the importers' monthly reports as "sold".
A third possible explanation is the aggressive marketing by importers, such as large discounts on special sales days. Mercedes Benz Israel general manager Emil Karin estimates that nearly half of all luxury car sales were made at these special events, which customers have come to rely on. Mercedes Benz sold 120 E-Class cars at special events during February.
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2009
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