Ultra-luxury automakers confront challenges in key markets

The world of ultra-luxury car sales is often perceived as being immune to many of the shifting dynamics that impact the mass market or premium luxury sectors.

Sure, a volatile stock portfolio could potentially temper or delay one’s willingness to dish out $380,000 or more for a new 2025 Bentley Continental GT Convertible Speed. But a more exclusive car buyer’s purchase decision is not predicated on the same factors that tend to affect a consumer considering a new Toyota Camry or even a Mercedes Benz G-Class SUV priced at $150,000+.

Digging in: Yet, despite the stark difference in the financial wherewithal of buyers of more exclusive vehicles, compared to those who purchase mass market cars, many ultra-luxury brands now find themselves facing their own headwinds in the business.

• Aston Martin – which recently relaunched the Vanquish nameplate in a 2025 model that has a base price of $434,000 (with destination charge) − announced in September that it expects to deliver 1,000 cars less than its initial 2024 projections (7,000) and won’t be able to meet it gross margin target of around 40%.The U.K. automaker also reported an operating loss of 12.1 million pounds ($15.7 million) for Q3.
  

• McLaren – which has an average vehicle selling price of $304,500 – has faced challenges to reach profitability, after losing 872 million pounds ($1.1 billion) in 2023.
  

• Rolls-Royce Motor Cars – which only sold 6,000 vehicles globally last year – is looking to boost its revenues with the all-electric Spectre Coupe (base price of $422,750) and its bespoke business, which drives the company’s average transaction price up to $550,000.

Why? Depending on whom you ask, the financial woes and challenges associated with the ultra-luxury market are rooted in a variety of factors, spanning supply chain issues to buyer skepticism about electrification. 

• Some contend that lower ultra-luxury car sales could also stem from a degree of sensitivity to how the current state of economic uncertainty affects others, with individuals who can afford the vehicles not wanting to appear as if they’re flaunting their wealth.

• But one of the common factors noted is weak demand in China, which is the number two market after the U.S., for ultra-luxury vehicle purchases. 

• However, the more insidious reason is that China’s technological sophistication is targeting more luxurious segments all over Europe.

Bucking the trend: Amid all the challenges, some ultra-luxury car brands have found a way to remain profitable.

• Lamborghini is currently experiencing its best sales year to date. The Italian automaker delivered 8,411 vehicles globally through the end of Sept., with a 20.1% increase in revenue for the first nine months of 2024, generating €2.43 billion ($2.6 billion USD).
  

• Ferrari reported $1.64 billion euros ($1.78 billion) in sales in the third quarter of 2024, up 7% year-to-year, even though the Italian automaker shipped 3,383 vehicles, 76 fewer than the same time last year.

Growing market: Even with its ups and downs, the ultra-luxury market continues to be an appealing sector for car makers.   

• Mercedes-Benz is planning to launch an ultra-luxury brand in 2025 called the Mythos Series, with the first model expected to be an SL Speedster, catering to the more exclusive Mercedes owners.
  

• Karma Automotive is hinging its future on its ability to appeal to the more exclusive ultra-luxury buyer, with models like the Karma Kaveya Super Coupe, a 1,000HP all-electric sports car with estimated pricing from $300,000 (USD), as detailed in Karma press release. 
  

• Toyota is considering launching an ultra-luxury brand above Lexus called Century. 

Why it matters: Given that the global luxury car market is expected to grow from$700.59 billion in 2024, to 1,366.62 billion by 2034, it certainly makes sense that more companies are aiming to carve out their own niche in the ultra-luxury sector as some of the more established brands look to better position themselves in the market. That said, the sustainability of those efforts will also require companies to be able to grasp the shifting dynamics of the luxury market overall.

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