Detroit Auto Show Features Cars For The (very)Rich

DETROIT, Jan 7, 2003; Madiline Chambers writing for Reuters reported that carmakers this week unveiled a range of superluxury cars, blatantly ignoring consumer concerns about shaky stock markets, weak economic conditions and a possible war with Iraq.

Even as U.S. President George W. Bush announced an economic revival plan for the world's biggest economy that has been criticized by some for favoring the rich, at least five major luxury brands took the wraps off new limousines and sports cars costing several hundred thousand dollars each at the Detroit Auto Show.

As global economic weakness deterred customers from buying new cars last year, with U.S and European sales falling roughly 2 percent and 3 percent respectively, pricing competition became fierce with most buyers looking to snap up bargains.

And while many consumers worry about losing their jobs, flaunting one's wealth is less socially acceptable than it was five years ago when several carmakers embarked on their superluxury projects.

"In 1998 (when Mercedes decided to make the Maybach), nobody told me what the economic conditions would be like in 2002... we have to live with our plans," Mercedes chief Juergen Hubbert told Reuters.

"I am sure the economy will improve by 2003-2005 so we are coming right in time," he added, referring to the sleek 350,000 euro ($364,000) Maybach V-12 limousine which already has 1,000 orders, or a year-long waiting list. Hubbert said it was largely a car aimed at a business clientele.

CAR TO ARRIVE IN

It will be competing head on with BMW's ostentatious new 19-foot (5.8-metre) Rolls Royce, available for a mere 320,000 euros ($333,000). The imposing new V-12 Phantom oozes its aristocratic heritage and company executives say it is a car "to arrive in". Both companies aim to sell about 1,000 of their limousines a year.

And it isn't just the Europeans in the spotlight. GM's luxury Cadillac unit unveiled a concept for a V-16 superluxury sedan called Sixteen.

The first automaker to have a V-16 engine in a car in the 1930s is reaching back to its history in a bid to rebuild its faded reputation in the luxury segment.

"Our dream was to create the modern interpretation of everything that made Cadillac the standard of the world," said GM Vice President Bob Lutz.

"This vehicle carries our vision for Cadillac to move upmarket."

GM has not yet decided whether to build the Sixteen, but Cadillac General Manager Mark LaNeve said the full-size luxury sedan was true to the brand's heritage. Last year, Cadillac showed a two-seater concept called the Cien.

At the sporty end, Bentley, a unit of Volkswagen, revealed its $150,000 Continental GT sports coupe with 500 horsepower.

Aston Martin presented a new high-performance two-seater and Maserati displayed its Kubang GT wagon concept car as alongside its V-8 Spyder and four-seater Coupe.

PUSHING THE LIMITS

Mouthwatering these models may be, but with such an abundance of automotive riches, some observers wonder whether there is enough room for so many top-notch cars.

"If you look at the past 10 years there were about 300 cars in the segment that sold for over 500,000 German marks (about 250,000 euros or $260,000) and if you take all the projections of the manufacturers, the segment will have to grow ten-fold. There will be winners and losers," Porsche board member Hans Riedel told Reuters.

Executives argue the super-rich are more or less immune to economic conditions, even if they are chasing the same 8,000 individuals.

"This group is defined -- there are only so many people that can afford it -- but these people are not dependent on the economy or on cycles," said Mercedes' Hubbert.

In fact, some experts say a growing gap between the super rich and everyone else may mean that the carmakers are not out of step at all.

"An inordinate amount of income has been concentrated in a small group of people in the last 60-70 years and it is not surprising that demand for luxury goods is up," said Isaac Shapiro, a research fellow at Washington's Center on Budget and Policy Priorities.

"The general sense is that income has become more concentrated among higher income people than among middle income people and that even within the top 5 percent there has been more concentration in the top 1 percent than in the rest."

Shapiro said lower capital gains income in the last couple of years due to stock market declines may have led to a slight drop in the concentration of wealth in the top income group but that it was still at near-record levels.

For those ultra-rich individuals seeking to show off their wealth, perhaps the most arresting model at the Detroit show came in the form of a Chrysler four-wheel motorcycle powered by a 500-horsepower V-10 engine.

The Dodge Tomahawk -- essentially the 8.3 liter engine from a Dodge Viper molded into a motorcycle frame -- is currently just a concept but Chrysler said it was seriously considering building several hundred at a price of at least $250,000 each.