Can Aston Martin Afford Making Their Cars More Affordable?
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