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Richest Americans Are Going ‘Conservative’ with Car Purchases

Think entry-level luxury instead of exotic super-car.

by
Becky Graebner

Bio

November 7, 2013 - 9:00 am

Exotic_Car_Run

Millionaire pop stars, professional athletes, and reality TV darlings may show off their exotic luxury vehicles and souped-up SUVs in tabloids and on TV but America’s richest aren’t interested in those types of cars. The Wall Street Journal posted an article on MarketWatch identifying some of the most popular cars in the wealthiest U.S. neighborhoods.  Clue: it’s not what you think.

Some of the top cars that America’s richest are purchasing are sure to surprise you–they definitely surprised me…

They’re buying WHAT?

The American Classic: Jeep Grand Cherokee

Why it’s surprising:

According to MarketWatch, the Cherokee is extremely popular in posh beach communities.  This is an American classic, yet not what you would expect the 1% to be driving into their heated 4-car garages.  With a price tag starting at $28k, this is an extremely conservative car purchase for the uber-rich.  (The Wrangler was also popular in these communities.)

The Mercedes-Benz C-Class

Why it’s surprising:

This is the new kid on the luxury block–and it starts at only $36k.  (It’s okay if you did a double take between the name “Mercedes-Benz” and price tag “$36,000.”  Most people do–at the TV commercials, billboards…)  This sedan was created in order to lure younger buyers into becoming Mercedes-Benz-buying lifers.  However, this vehicle isn’t just attracting the younger demographic of uber-rich.  The C-Class also seems to be the “IT” “Sweet 16″ birthday vehicle.  In this case, I’m not sure Mercedes will hook life-time brand buyers, but the swarms of birthday C-classes are, at least, sure to cultivate a taste for luxury in the spoiled teen population.

2012-ford-f-150-passengers-side-front-three-quarters

They’re buying WHAT?

BMW 3-Series

This BMW model is understandably popular in the U.S. because it’s entry-level, yet has that BMW je ne sais quoi.  However, I’m surprised that some of the wealthiest Americans are purchasing this vehicle over both the 6 and 7-series vehicles.  MarketWatch lists the 3-series as being most popular in the Coral Gables, Florida area–which is full of retirees.  Although a great BMW, it’s not one of the “usual suspects” when you think of retirees looking for cars that have luxury, comfort, and space.

Ford F-Series

Why it’s surprising:

It’s surprising because you picture the very wealthy in black, luxury sedans.  I know, I know, wealthy, RUGGED Americans need their vehicle too.  I’m just happy it’s an American brand.

Tesla-Model-S

The Usual Suspects:

The “Executive Taxi”: Mercedes-Benz E-Class

Why it isn’t surprising:

The E-class is mid-level and seems to be the “go-to” for professionals, retirees, and executives who want a solid, luxury sedan.

The Silicon Valley Home-girl: Tesla Model S

Why it isn’t surprising:

Several of the U.S.’s richest neighborhoods are located in California–specifically Silicon Valley.  It makes sense that the Californians will want the coolest electric vehicle out there.  The fact that it’s “home-grown” is probably another lure.  Too bad it doesn’t come in shades of the Californian sunset.

***

When one pictures the 1% as car buyers, we need to think American, entry-level luxury, and below a $71,000 price tag instead of super car exotics. What does this mean for the automotive market?  Are wealthy Americans playing to their more conservative side when purchasing a vehicle?  (Is this the recession talking or just good money sense?)  Could the wealthiest Americans be losing interest in super-luxury brands or are some of the mid-market and traditional luxury brands just “doing it better” these days?  Leave a comment–I would like to know what you think!

Becky Graebner moved to the east coast from Wisconsin in 2011. She is still a rabid Badger and Packer fan, although she does support the Caps in hockey. She enjoys Formula 1 and Indycar. She likes the eastern seaboard but does miss track days with friends and family at Elkhart Lake and the Milwaukee Mile. Her favorite drivers are Kenny Brack and Robby Gordon.

Comments are closed.

Top Rated Comments   
Owning a Tesla is exciting for another reason: you never know when the damn thing will burst into flames.
50 weeks ago
50 weeks ago Link To Comment
That's not really surprising: it all has to do with how those richest Americans actually earned their money.

People who have dump trucks full of money back up to their doors on a regular basis as compensation for very little actual effort (professional athletes, actors, and children of inherited wealth, for instance) go for the ultra-expensive "look-at-me" vehicles. The actual VALUE of the vehicle isn't an issue; just that it costs more and looks more ridiculous than what everyone else owns. These are the same people that buy thousand-dollar bottles of wine and ten-thousand dollar shoes. They also tend to be liberal statists.

People who have earned their wealth through hard work and personal sacrifice tend to understand the value of a dollar. They see a quarter-million dollar vehicle as a waste, when a twenty-five thousand dollar vehicle will perform the same function. Not to say that they don't buy nice things; things for investments, and things that are better than most of the "rest of us" have -- but they are able to see through the sham of an artificially inflated price to the root value underneath. After all, that's what made them wealthy in the first place. They also tend to be conservatives.
50 weeks ago
50 weeks ago Link To Comment
All Comments   (26)
All Comments   (26)
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Most people with money understand the difference between an asset and a liability. Cars are liabilities.
50 weeks ago
50 weeks ago Link To Comment
Bill is pretty right, but misses two additional elements.
1) the IRS has a cap on deductible value of a car (back when the original cap was $35k, dunno what the current cap is) if there is a business that pays the cost, there is a cap on what can be bought and paid for with pre-tax dollars.
2) How many of the "1%" don't want to be targeted for vandalism, "smash and grab" robberies, carjacking, or other crimes because they were identified by the car value?
50 weeks ago
50 weeks ago Link To Comment
The wealthiest zip codes still have a lot of upper middle class people who cannot afford luxury cars. Zip codes are too coarse a division to identify the truly wealthy. Also many, buy or lease their cars through their businesses so the cars don't appear to be registered at their homes.
50 weeks ago
50 weeks ago Link To Comment
Bill T. is right on target. Those of us with wealth are wealthy not because we earn a lot, but because we spend very little, and really get our money's worth. See the book "The Millionaire Next Door" to understand and learn how to do it yourself.
50 weeks ago
50 weeks ago Link To Comment
Two things. One, the smaller hi-tech cars like the BMW 3's and the Lexii are awfully nice, fast, reliable, pretty cars. And the Cadillac CTS. Two, have you got a look at traffic in the last ten years, who needs a 180mph supercar when you're lucky to make 30mph from door to door?

Actually both Porsche and Ferrari and soon maybe Acura are coming out with super, super-duper, and are-you-kidding-me hybrids. These may sell to the 0.01%.
50 weeks ago
50 weeks ago Link To Comment
What my wealthy clients bought depended upon how they had earned it. Those in the status conscious businesses owned the Mercedes and BMWs. Those who ran tool and die shops seemed to prefer the Lexus. Many other small business owners loved their Jeeps and pickups, probably for two reasons. They knew those vehicles would get them to the work place even in a heavy snow storm and because many lived in the exurbs or had second homes in the country, the real country, not a glamorous resort area.
50 weeks ago
50 weeks ago Link To Comment
There are two kinds of rich Americans-- those who care about cars, and those who do not. The latter have always bought a semi-up-market luxury-ish sedan, as it is "some car", and that's all they want.

Those who do care about cars tend to drive the interesting stuff.
50 weeks ago
50 weeks ago Link To Comment
"This is the new kid on the luxury block–and it starts at only $36k. (It’s okay if you did a double take between the name “Mercedes-Benz” and price tag “$36,000.” Most people do–at the TV commercials, billboards…) "

The CLA is the new kid on the block there - the C-class name dates back to 1993/4, and the current C is a 2011 refresh of a 2007 chassis.

The CLA also starts at a more-thesis-relevant $29,900 - same as the C did in 1994, and even better with inflation.
50 weeks ago
50 weeks ago Link To Comment
Sigivald--you're right with the CLA. my slip up.
thanks for reading!
50 weeks ago
50 weeks ago Link To Comment
I once saw a Maybach in a parking lot. I immediately assumed that such a blingy, horrendously expensive vehicle belonged to a gangbanger or a rapper, blowing his record company advance money on a tremendous toy.
50 weeks ago
50 weeks ago Link To Comment
If you live in South Florida, it could have been Rush Limbaugh. He's mentioned driving his Maybach to work. Seems unlikely that he'd leave it in a parking lot though.
50 weeks ago
50 weeks ago Link To Comment
"I’m just happy it’s an American brand."

Why? American "brand" doesn't mean American "made". Of the top 10 most American "made" cars, foreign brands often take about 5 of them.

Additionally, the "American made" slogan is a red herring that actually makes out standard of living WORSE, not better. It's called comparative advantage.
50 weeks ago
50 weeks ago Link To Comment
"American made" is a red herring to be sure. So many still think we live in the world of 1980. Nowadays a car will have components, sub-assemblys and assemblys made all over the world, with final assembly by American workers in (right-to-work) America.

So who cares if the company happens to be called Toyota or Hyundai?

It's called the "Global Economy", learn it, know it; cause like it or not, your living it.
50 weeks ago
50 weeks ago Link To Comment
+1 on the economics lesson.

(On "American made", of course, we should remember that many non-American brands have US factories these days. Toyota's been building cars in the US for, what, decades now?)
50 weeks ago
50 weeks ago Link To Comment
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