Luxury car segment not keeping pace with overall market

The mass luxury car segment is in the doldrums amid the economic gloom, and it seems only new models at the right price can lure buyers into showrooms.

In 2016, when the total passenger car market is expected to surge nearly 50 per cent from 2015 to an estimated 85,000 units, sales of mass luxury brands have lagged (see table).

This is mostly due to the weak economy, with troubles in the oil-and- gas industry, as well as the soft investment banking and property sectors, reducing demand.

However, one of the better performers is Jaguar, thanks mainly to the introduction of the XE premium compact sedan at the end of last year.

"The Jaguar XE opens up a whole new market for us because it draws customers from the BMW 3 Series and Mercedes-Benz C-Class segment," said Victor Kwan, managing director of authorised Jaguar dealer Wearnes Automotive.

Along with the full impact of nine months of sales, Mr Kwan added that this year's bigger COE quota has also boosted Jaguar's volume - so much so that the British marque is expected to register record sales of 500 units by end-December.

BMW is another luxury brand which has seen its sales grow in 2016, although 2015 was an unusually low base for the German premium manufacturer.

Authorised dealer Performance Motors recently ended a two-week private viewing of the new 5 Series mid-size sports sedan.

The seventh generation of this popular model will be launched only next February or March, and the static display of the left-hand-drive car was reserved for interested parties to give their input on the features and options they would like offered.

There was no price indication and photography was not allowed, although a Performance Motors representative said the event registered strong interest even though the car is not being marketed yet.

"The 5 Series is one of our best- sellers, and many current owners are hoping to upgrade," said the representative.

One example of a new model at an attractive price is the new Porsche Panamera.

Due to be launched in the first quarter of 2017, it has pre- launch orders of almost 30 units already.

"Given the current lacklustre market, this is definitely a good result, and we are confident that when we ramp up our promotions closer to the launch date, we should have double the number of orders," said Jason Lim, general manager for sales at authorised Porsche dealer Stuttgart Auto, which is part of the Eurokars Group.

The German sports car maker's Panamera range starts from S$365,888 for the rear-wheel-drive variant with a new 3.0-litre turbocharged V6 petrol engine, and goes all the way up to the all-wheel-drive Panamera Turbo at S$711,688. All prices are before options and COE.

The price of the entry-level Panamera is similar to its predecessor, which had a naturally aspirated 3.6-litre V6, and Mr Lim attributed the strong interest to "the right pricing for the right product".

"It is all about the acceptance level - what is the price that I can accept for your product?" he explained.

"The total package is also important. Porsche offers a worry-free five-year warranty and five years of full maintenance."

Porsche's year-to-date numbers are down compared to a year ago, but it is confident about the full-year tally.

"We sold 532 units in 2015, and we are happy to be able to maintain, if not exceed, last year's sales," said Mr Lim.

According to VinCar managing director Vincent Tan, a new model and an attractive price may be key, but they are not as important as the prevailing economic conditions.

"The economy is the No 1 factor," said Mr Tan, who runs one of the biggest parallel importers.

Market sentiment has "a big impact" on the decision to get a new car.

He added: "Of course, people still get excited when there is a new model. But nowadays, they don't rush to buy like they used to."

This article was first published on November 14, 2016.
Get The Business Times for more stories.