Supercars In The US, Japan, And China: How QE And Corruption Boosted Sales

(owned by BMW), whose Phantom retails for over $400,000 a pop. September was huge, with sales almost tripling from last year to, well, 56 units, bringing year-to-date sales to 285 units, up 29% (Motor Intelligence). For Ferrari, however, September was crummy, down 20%, and year-to-date sales were crummy too, increasing only 7% to 1,539 units, when the overall auto industry was up 8.1%. But Lamborghini sales rose 19.1% in September to a whopping 56 units. Year to date, they jumped 27.6% to 490 units.

“The U.S. is really getting back on track and getting more important for us,” explainedLamborghini CEO Winkelmann in an interview in Tokyo – he does get around quite a bit.

The other new promised land is Japan (again) – where Abenomics kicked in early this year, and where the Bank of Japan is printing trillions of yen on a monthly basis. These wealth distribution policies drove up asset prices and the national debt, and sales of luxury goodslike art, jewelry, high-end watches, and precious metals jumped 18.3% in August and 14.2% in July, after having been on a tear all year – while regular folks are struggling with stagnant wages and year-over-year goods inflation of 1.8%.

Ferrari sales jumped 28% in Japan through August. And Lamborghini sales rose 14% – constrained only by supply. Eager buyers, the beneficiaries of Abenomics, have to deal with waiting periods of up to one year for a $400,000 Lamborghini Aventador. “We are very happy with Japan,” raved Winkelmann. “It’s coming back big time.”

In this manner, supercars have become a litmus test of what works and what doesn’t. What works: Printing money and handing it to the largest banks and securities dealers to let them distribute it as they see fit, the case in the US and Japan. Pushing interest rates below the rate of inflation to where it bleeds savers, pensions funds, systems like Social Security, etc. is also beneficial. But cracking down on lavish gift-giving to get in on a deal or to get something done, or cracking down on corruption in general, is a really, really bad idea; sales of ultra-luxury products just go to hell.

“This sort of political brinkmanship is the dominant reason the rating is no longer ‘AAA,’” S&P ratings agency wrote about the US in a research note. More ominously, it warned that if Congress failed to pass a debt-ceiling hike before the out-of-money date in mid-October, it would cut the U.S. to “selective default.” And then there would be the post-default era. Read…. S&P Threatens To Cut US Debt To JUNK.