HONG KONG (Reuters Life!) - It’s a business with a history of riding out economic slumps, but Hong Kong’s sports car dealers say sales have all but skidded to a halt.
While the city’s ubiquitous sports cars and luxury vehicles may not be an official economic indicator, they have symbolized the amount of money that’s flowed into this Asian financial hub in the last decade.
Now they’re showing just how much money has flowed out.
“This car usually wouldn’t last here for more than a week,” said Edmund Cheung, who manages a used car dealership, as he passed a silver 2007 BMW convertible priced at HK$698,000 ($90,000). “It’s been a month now.”
Even in 2003, when Hong Kong’s economy was hit by the SARS virus outbreak, dealers say slick, pricey cars still zoomed off the lots. But the city, like the many other parts of the world, is in a recession now, and its economic picture is darkening.
For some of the more niche dealers, such as Lamborghini, sales still appear to be holding up.
But for those who are accustomed to selling a barely driven Jaguar to a local entrepreneur or a newly arrived expatriate banker, times are tough.
Sales last month at the second-hand New Method Motors automall where Cheung works were a mere 92 cars, worth HK$40.8 million, according to the mall’s monthly sales tally. The mall is used to selling more than double that per month.
With roughly half of the sales coming from foreign residents, what worries Cheung is not only the amount of Western bankers and lawyers getting laid off, but the lack of financing for the ones who have just arrived.
“Banks are really, really strict. It’s crazy,” he said.
Not far from where a black Ferrari is on sale for HK$2.85 million, Ken Lee sits at a desk waiting for customers.
He echoed concerns about lack of financing, adding that buyers are having to fork over more cash. How does the current environment compare to when the SARS outbreak hit Hong Kong?
“It’s worse. In 2003, you could still sell 200 cars,” said Lee, of Techwin Motors Limited.
Max Cheng is a brand manager at Lamborghini Hong Kong who runs the dealership. His customers fill out orders for the cars and he has them shipped from Italy where they’re made.
The convertible model on display at the showroom where he works can travel 320 km per hour and costs HK$3.4 million.
“Will it hit our product? Yes,” he said, when asked about the financial crisis. “How bad? I can’t predict.”
Sales at the dealership are up this year, he said, to 50 cars from 38, a factor he attributes to the fact that Lamborghinis are more of a niche market. Buyers often pay entirely in cash.
But for the more mainstream sports cars dealers, there appears to be a glut of fancy, brand new cars sitting idle.
Patrick Botelho of Well Done Motors says the cost of financing for cars has gone up to around 50 percent or loans are just not given.
The dealers themselves are in the same position. Usually, if they can’t sell a car within three months, they can refinance a loan to extend repayment. Banks have tightened these up as well.
Botelho is also getting calls from customers asking him if he’ll take a car back. The Porsches and their ilk in and around his lot aren’t moving fast enough, he said, causing him to turn away most of those offers.
“We’re overstocked,” he said. “Supply is bigger than demand.”
Editing by Miral Fahmy