Americans need a whopping deal these days -- a steal amid the tide of foreclosures, free hotel nights or permanently discounted staples at the grocery store -- to part with their cash.
Even wealthy households are behaving differently in this recession. They're more willing to sample a new $4 Angus burger at McDonald's, browse the Wal-Mart aisles, or test drive a $37,000 Hyundai sedan engineered like a $45,000 European import.
Much like the Great Depression stoked a generation of thrift, this downturn has experts wondering how deep and lasting "shopping fatigue" will be. It's back to basics for us all.
Auto sales are bottoming out, but you'll need to study the spending habits of the affluent to spark a real industry rebound.
When will luxury boom?
That's a big question hanging over automakers these days -- how fast will the luxury market rebound? BMW, Lamborghini, Maybach, Bentley, Infiniti, Land Rover, Cadillac and Lexus have all posted alarming sales drops this year.
U.S. luxury automobile demand will fall below 1 million units in 2009 from a recent peak of 1.5 million. That's a lot of profits down the drain.
Demand for upscale products, often immune to downturns, is forecast to drop an unprecedented 10 percent this year, according to a recent report from Bain & Co. The Boston firm predicts luxury goods won't get a full recovery until 2012.
This great recession has been particularly brutal for the wealthy -- depressed home values, and dwindling stock portfolios and retirement accounts. Tight credit and depleted retirements are forcing buyers who aspire to own a BMW or Audi to the sidelines.
The American Affluence Research Center's spring survey found that 68 percent of respondents have no near-term plans to spend money on a car, cruise, boat, new home, vacation pad or home renovation. That is a record high, as well as a sizable jump from 53 percent in spring 2008 and 36 percent in spring 2005.
The days of flagrant consumerism are over, says Johan de Nysschen, Audi's U.S. chief.
Shoppers 'holding out'
"The economy is not going to settle in the unbridled optimism of the past," he said. "People are still kicking tires, but shoppers are holding out for better deals."
In launching the new E-Class sedan, Mercedes Benz is avoiding sale prices, but now knows its target audience will no longer blindly write a check.
So it has cleverly placed the starting price for the new sedan at the end of television commercials. At $48,600, it is almost 9 percent less than the starting price for the previous generation E-Class.
Mercedes executives told the New York Times recently they were banking on loyal customers to recognize the price as a "huge value story."
The message -- Mercedes, BMW and Land Rover feel your economic pain. And they are subtly learning to dress up luxury in new value or near-luxury duds.
Will you still buy it? We'll find out when this crisis fatigue and recession fatigue end.
David Phillips is a freelance writer and contributor to AutosInsider.com. You can reach him at dphillips@detnews.com">dphillips@detnews.com.
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