Keeping Up With the Jones'

Luxury is…

• An indulgence rather than a necessity
• Possessions that are excessively expensive
• Sumptuous, extravagant living
• Inessential but conducive to pleasure and comfort
• Expensive and/or hard to obtain

In the automotive sense, however, luxury has six categories as defined and detailed by Autodata Corp. – Lower, Middle, Upper, Super, Specialty and Sport. The segmentation is based primarily on the suggested price of the vehicle and there are an amazingly large number of vehicles from which to select, 81 different models to be exact. Here’s a snapshot of Autodata’s recently released November 2006 sales report to help give you an idea:

Luxury Car Category Sales (January – November 2006)

These six luxury categories combined accounted for sales of 117,862 units or 22.0 percent in November and 1,352,027 units or 19.0 percent for all sales through November.

Analysis of Luxury Car Sales (Top Five Sellers by Category)
 

The Top Selling Luxury Trucks

To many the term “luxury trucks” is an oxymoron, something akin to “jumbo shrimp,” but to thousands of Americans a luxurious truck is an essential mode of transportation. And for automakers it is an important segment of luxury vehicles. See the numbers below to understand what I’m talking about.

Suggested MSRPs for the Top Five Best-Selling Luxury SUVs

Top Selling SUV’s Through November 2006

And the Number 1 Luxury Brand Is ….

It’s still too early to tell, but based on global sales through November many predict BMW is poised to be the world’s biggest premium brand of motor vehicles. Through November in the U.S., Autodata reported BMW with a lead of almost 24,000 units over its long-time rival, Mercedes-Benz.

Who Is Buying All These Luxury Vehicles?

The demographics and psychographics of luxury car buyers can best be summed up in two words – rich people. But now the problem becomes what defines rich? It’s all about money and wealth. Aren’t they the same?

Not according to Nobel Prize Laureate economists – they define money as variable income. But wealth is a financial foundation of net worth, translated into understandable terms it means if you’re earning several hundred-thousand or several-million a year in wages, salary and/or commissions you can afford almost anything. But if you loose your job, do something illegal, suffer a major accident or similar catastrophic career and salary ending disaster, the income is going to end. You may not be broke, but the standard of living may drop depending on your investments, insurance and net worth.

Wealth or net worth is the sum of assets minus debts. As detailed by the IRS (and they should know) assets include personal residence, other real estate, closely held stock, publicly traded stock, government bonds and other tangibles which can be, if necessary, sold. It means you don’t need a salary or an income to survive.

This is big money! As in eight figure good gene pool inheritances, investments, trust funds – wealth that will keep the fortunate sustained in grand style now and for at least a few generations.

And more significant are the extraordinarily large number of individuals with more wealth than ever in the nation’s economic history. Millionaires and multimillionaires’ are literally the under-privileged rich. To be included in Forbes 400 List this year required wealth amounting to over $1 billion. The collective net worth of the nation’s wealthiest individuals climbed $120 billion to $1.25 trillion. Ten years ago, all it took was a measly few hundred million.

Today in America there are more people earning more money than ever from wages and salaries, some nine figure bonuses are not unheard of in the investment industry. According to the Census Bureau, there are (in round numbers) 115 million households in the U.S. today; 14 percent or 16.1 million of them have incomes of $100,000 or more. And in just four more years, that number is projected to reach 20 percent or 24 million people will have incomes of six figures or higher.

Five years ago in 2001, the IRS projected the wealth in America by the size of net worth assets.

Net Worth – Wealth Distribution by Individuals - 2001

Earlier this year Northern Trust Company released its Wealth in America Study complied by the Phoenix Affluent Marketing Service detailing some interesting demographics and psychographics about wealthy individuals with mega bucks to invest. This study used individuals with $1,000,000 or more of investable assets, which constituted almost 5 million households at midyear 2005.

Some Highlights

Average Age: 55
Average Investable assets: $3,375,000
Average Net Worth: $4,646,000
Average total assets: $5,584,000
Average household income: $209,000
Employed full-time: 45 percent
Retired: 34 percent
Own Business: 24 percent
Own professional practice: 13 percent

Where do the rich live?

Not surprisingly, over half of the 500 wealthiest/richest U.S. zip codes are in cities in California, according to Forbes ranking of zip codes which is based on median price of a house. Next, is New York which takes 20 percent of the pie. The balance of upscale houses rest in the states of Massachusetts, Connecticut, Arizona, Maryland and Florida with some of Texas which are usually in the suburbs of urban power or industrial cities.

Click here to see how your personal zip code fares in the income and wealth. http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96947,00.html

What Cars Are The Rich Going to Buy Next Year?