Sydney - Luxury car dealer Normal Elkordi has never seen it this bad - financial high-flyers feeling the pinch of the global economic meltdown scrambling to sell their Ferraris for a loss.
"We're not talking Holdens or Fords here, we're talking Aston Martins, we're talking Ferraris," he said. "I've never seen it like this before."
As anxiety grips world financial markets and stock prices crash, the Sydney-based dealer is seeing increasing numbers of young executives come into his showroom, hoping to offload their near-new prestige autos.
"These blokes have probably lost a lot of money in shares, their bonuses come on shares. Their expenses are through the roof," Elkordi said.
"A lot of them are upfront. I'm not saying they can't make the repayments and they are going to get repossessed, it's just they have to get rid of that debt."
Indications are that the mood will also infect Asia, a significant market for luxury cars, as the full impact of the financial turmoil stemming from the United States is felt.
"I would say it (the crisis) has not reached Asia... as it has reached America or Europe, but it will," a figure in the regional luxury car industry, who asked not to be named, said in Singapore.
"The question is: will it be as big here?"
Luxury makes have been targeting Chinese customers both in Hong Kong and mainland China over the past few years with spectacular results, but there are signs the crisis is beginning to bite.
Holding out on luxuries
Hong Kong has more Rolls-Royce cars per capita than anywhere else in the world, but the super-rich have stayed away in the past few weeks, a period which is normally busy for the famous marque.
"Our customers aren't so much directly affected by the economic downturn but they are putting on hold luxury items like HK$7m ($900 000) cars," Leon Roy, the general manager of Rolls-Royce Motor Cars Hong Kong, told the South China Morning Post.
However, a spokesperson for Ferrari in the Asia-Pacific region said they expected sales growth to remain strong in China.
"As our president said at the launch of the California model recently, ours is a niche brand and if you are the type of person who can afford to wait 10-15 months for a car, you can still afford it," the spokesperson said.
He said they expected some of the long waiting lists for the cars to be trimmed during the crisis, but do not see sales dipping.
Audi Singapore managing director Reinhold Carl, however, told the Straits Times: "2009 will be a tough year for the car industry and the speed of growth for Audi in Singapore will be affected somewhat."
William Choo, commercial director for Lexus at Borneo Motors in Singapore, was quoted as saying buyers might switch to smaller, cheaper models next year.
But Simon Rock, managing director of BMW agent Performance Motors, said: "We expect to sell more cars on the whole next year."
'I've got over $5m siiting on the floor'
Sydney's Elkordi said cars are more easily dispensed with than other items and sellers are willing to give them up despite the likelihood of loss.
In the last month he has taken on six or seven cars from sellers in this situation and turned away three or four more, he said.
"You can imagine a gentleman has bought a new Ferrari at AU$507 000. If he was to sell that car to me today, I would be paying probably AU$370 000 to AU$380 000 for that car if it's 12 months old, only because... who am I going to sell them to? That's the problem.
"That's why at the moment, I've got over $5m sitting on the floor and we're not selling any cars of our own."
The dealer, who has worked the market for 17 years, said the credit crunch had crippled the luxury sector - from property to cars and boats - and he was now catering to more people buying cars for $150 000 rather than the $250 000 of a year ago.
Sydney's principal Ferrari and Maserati dealer Tony Graziani agreed it was now a "buyer's market" for prestige autos but said he had received no cancelled orders for his luxury Italian motors.
Speaking from a showroom floor filled with gleaming cars, Graziani said the mood of the times was uncertainty and some buyers admitted the situation was very different from two years ago.
"We're not happy, we would like it not to happen," he said of the deepening global financial crisis. "But overall we're not too bad."
Andrew McKellar, head of Australia's Federal Chamber of Automotive Industries, said a sense of caution was pervading the industry after a record 2007 in which one million new vehicles were sold Down Under for the first time.
"We are certainly no exception to other sectors in the economy," he said. "If asset prices suffer, if growth in the economy slows, if there are concerns about employment then clearly that will have an impact in the market place."
As the Australian International Motor Show opened in Sydney on Thursday without high-end brands Audi, BMW and Mercedes Benz, Elkordi said he didn't expect the market to improve anytime soon.
"I've been told it's going to be worse. Everyone that you're talking to, no one is positive, there's only negative," he said.
- AFP