Note: This post was previously published at Cars In Depth.
If you’ve been pining for a hand crafted high performance British luxury car but the only thing standing in your way was the size of the monthly nut, Aston Martin has some good news for you. The exclusive Newport Pagnell automaker has announced what they describe as “unprecedented” low interest rate financing on nearly their full line of automobiles. The offer is good on six models and offers car loans at interest rates as low as 0.9%. That super low rate is available on the DBS and DB9 coupe and convertible Volante models, as well as the V8 Vantage coupe and roadster and the four door Rapide for loans up to five years. Six year loans are a bit more expensive, 1.9%. A-M’s twelve cylinder models, the V12 version of the Vantage and the Virage grand tourer, can be financed at 1.9% up to 5 years with longer loans at 2.9% The seven figure One 77 is not included in the offer.
It might move some metal but this could be very damaging to the Aston Martin brand and may indicate some panic within the company.
Aston Martin used to be a very small car company, producing as few as 600 cars a year two decades ago. Under Ford’s ownership, the brand grew substantially, eventually reaching about 7,000 units in 2007, the same year that Ford sold off A-M for slightly less than a billion dollars as it marshaled cash presciently before the financial crisis of 2008. That crisis resulted in fairly steep declines in all ultra-luxury marque’s sales. About 4,500 Astons were sold in 2010, down slightly from 2009. Year to date sales for 2011 are again down a few percentage points. Earlier this year it was reported that Aston Martin would be cutting production of the four door Rapide almost in half due to slow sales.
Aston Martin faces the dilemma that all makers of exclusive goods face when they try to dramatically increase their sales. The more you sell, the less exclusive your products are. Luca di Montezemolo recently has been saying that Ferrari won’t build more than 7,000 cars a year. Of course, in 1993, when a financial crisis in Asia resulted in Ferrari sales dropping by half after rapid expansion, Luca said back then, “Ferrari will never, never, never build more than 3500 cars a year.”
So high end car makers must be at least cognizant (if not actually diligent) about not damaging their brand by making it less exclusive. That’s why the announcement of the financing offer from Aston Martin is surprising. When was the last time Bentley, Rolls-Royce, Ferrari or Lamborghini had a sale? Yes, more mundane luxury marques advertise year end offers with special prices or financing, but BMW, Mercedes, Porsche and their competitors for the most part have much lower average transaction prices than the ultra luxury brands. If the city you live in has a fashionable shopping district, you’re not likely to see “50% Off! Clearance Sale – Everything Must Go!” banners in store windows in that part of town.
Also, if you need a special interest rate to be able to afford a car, can you really afford the car in the first place? Yes, rich folks like to save money too, but how many potential Aston customers are sitting on the fence because the interest rate is a percentage point or two too high? And speaking of a percentage point, does it really help the brand to offer a slightly higher rate for 72 month vs 60 month loans? Again, if the difference between being able to make the nut and not is stretching out the loan for another year, should that person really be buying an ultra luxury car?
Recently, Sajeev Mehta and the Best & the Brightest over at The Truth About Cars were discussing people who can afford to buy, but not fix, a used Porsche. Many commenters said that if you can’t afford to fix it, you shouldn’t be driving it in the first place. While, as Sajeev stresses, a monthly note on an entire car is easier to financially digest than a lump sum repair bill for an engine or transmission, those commenters do have some logic on their side. If you can’t handle the costs of ownership beyond purchase or lease price, maybe you really can’t afford it. One of the things that has killed Mitsubishi passenger sales in the US has been bottom feeding credit sales to people whose cars then get repossessed. That does wonders for depreciation. Selling cars to people who can’t afford them ultimately damages your brand as the cars get passed down the food chain. If easy financing can damage a mass market brand, it seems to me that all the more so it can damage an exclusive luxury brand.
On the upside, if you’re looking to get a good deal on an Aston Martin, I’d recommend that you not take advantage of the special offers on financing. Just wait a year or so for the people who can’t really afford an Aston but take A-M up on the current financing deal to start selling their cars.
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile or entertaining, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks – RJS
It’s not just education, health care, and housing that have skyrocketed in price in recent decades, though government involvement in those three played a major role in the cost inflation. It’s certainly affected the auto market.
Once upon a time, even luxury brands could be seen as “someday” purchases by an upwardly mobile middle class. In 1970 a Datsun 240Z could be had for $4,000, a Jaguar sedan or a Mercedes or BMW sports car for under $10,000, a Ferrari for under $20,000. In 1972, my father bought a Toyota Corona for $2,400, and in 1977 he bargained a Celica for my older sister down to $5,100.
I distinctly remember an article in a magazine for auto enthusiasts (from 1968, as I recall) blasting Mercedes for pricing the 250 sedan at over $5,000. The accompanying photo showed dollar bills leaking out of the trunk, so egregious did they deem the price gouging.
Maybe you’d like to do current-day equivalent prices on those and see whether they’re really gone up in price. I think you’ll discover that prices have indeed FALLEN. Modern cars are faster, more efficient, easier to drive, much safer, WAY more comfortable, better designed and pretty much come as standard with all of the things that were once luxury items (if they existed at all) that commanded high premiums. Mazda doesn’t sell any cars without stability control, for example.
So, sure. In the early 70s you might have been able to buy a pretty quick chrysler hemi for what would appear to be a small number of dollars … but go and compare that to the price of a family home around the same time. I think you’ll get a shock.
Cars are cheap these days. They really are. They’re pretty darn good, too.
It’s not like Aston is what it was – who owns it? What knowledge have they of British luxury sports cars?
Sic transit gloria mundi.
“What knowledge have they of British luxury sports cars?”
Agreed. These days they insist on making them reliable – and they don’t even inflate the performance figures. Sacrilege!
Not being in the position to afford one (or having the lifestyle which would make it worth owning one if I could afford it – I just don’t have the time to enjoy something like that), I’m talking out of the top of my hat, but …
From what I have heard and read, the modern astons are pretty schmick sports cars. They will give a porsche or ferrari (depending on which one) a run for its money, albeit at a high price and a slightly different package (they’re more a GT than a race car). And the scuttlebutt from dealers and mechanics is that they’re surprisingly reliable. But they’re an image, absolutely. And for a lot of people they’re an aspirational toy/status symbol that’s within reach (lucky sods). For at least some of those people, a low interest rate offer will make the idea more attractive. For others, it’ll make the idea more “justifiable” … if only to the missus. I really doubt that these loans will make the brand less desirable.
What it MIGHT do is make potential purchasers look sideways at the company and wonder if they might still be around in 5-6 years to support the thing. I can’t think of much worse than dropping 100+ grand on a shiny motor and seeing the company go the way of TVR or Saab. If anything, that’s the downside for aston martin in this.
As a recent columnist in Automobile magazine said: If you buy a $75,000 used car for say $10,000, when it needs repairs or maintainance, it is still a $75,000 car. Keep that in mind when trying to make your daydreams come true.