Supercar Lists

I have an affinity for what Esquire, back when it was good, called “dangerous knowledge.” We’re not talking about the kind of dangerous knowledge described by the BBC documentary in which scientists understand something so complex about the world that being unappreciated by their colleagues drives them to suicide. However, we are talking about an underlying order to the world around us that escapes the knowledge of the average person. Recently I read an article by Bret Berk at Car on Driver on supercar lists, which describes how the super rich buy special edition Aston Martins, McLarens, Porsches, Ferraris, and Lamborghinis that are even more expensive and exclusive than the cars that I already can’t afford — like this Porsche.

I could recount the article from my good friend Bret, but he did such a good job that it would be both redundant and hard to do. However let me review my three big takeaways. First, I didn’t even know there were specialty lists for even more exclusive than showroom exotic cars. I remember going to Jim Loose Imported Cars in Palo Alto growing up, which was like the coolest place in the world. But knowing that there are lists of buyers who are available to snap up even more exclusive and limited edition cars — that was a revelation to me.

Second of course is the economics drives the existence of these lists. Making high-end cars for wealthy clients is profitable because buyers will pay a premium for the additional exclusivity. Says Matt Clarke, Aston Martin North America’s director of marketing and communications. “I can be blunt and say the specials, as we call them, they’re profitable.” But mere money isn’t enough to buy one of these cars because there are a number of additional factors at play with these specials. It helps if you have a relationship with the local dealer by having bought cars from that marque previously. Also it helps if the car will be used frequently and shown widely, because it doesn’t make sense to have a beautiful car if nobody gets to see it or ride around in it. Finally it helps if you don’t turn around and sell the car immediately, because they do tend to appreciate, just to make a quick profit because that jeopardizes the relationship and — let’s face it — it just isn’t cool.

Finally, there’s a behavioral economics aspect to supercar lists that I found nonintuitive. When the list of high-end, wealthy clients is created by a manufacturer, they figure that half the people will “flake out” because they’re not liquid enough — that is, they don’t have the cash on hand — or their interest level isn’t high enough. Then the list is halved by the manufacturer again so only half the demand is met. This seems counterintuitive because they could make more money by making even more cars. However, by creating unmet demand, the manufacturer creates  greater satisfaction from the half who received a car and desire in the half who didn’t. This then creates an opportunity to push the desirous half to other products in the short-term or other lists in the long-term. It’s a complex business and a complicated world!

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s