Luxury car sales in Italy plunge

gulfnews.com (Rome) - Plunging sales of luxury cars in Italy — from flame-red Ferraris to Porsches and Aston Martins — have provided the latest sign that the Italian dolce vita is turning sour, amid austerity measures and political uncertainty.

In its worst performance for more than three decades, the overall Italian car market recorded new registrations of no more than 1.4 million vehicles in 2012 — a level last seen in 1979.

Worst hit were premium "Made in Italy" marques, with Ferrari sales falling 57 per cent year on year, and sales of Maserati down 72 per cent, according to the Italian auto industry association, Unrae. Foreign luxury brands were also hit. Sales of Porsche were down 22 per cent on 2011, while Aston Martin sales dropped 40 per cent.

This gloomy update from the car market adds to data from across the Italian luxury industry — including fashion and accessories retailers — showing that sales of high-end products fell abruptly last year as austerity measures took effect.

Luca Solca, head of luxury goods research at Exane BNP Paribas, has estimated that the Italian luxury goods market alone, comprising leather goods and clothes, shrunk €1b illion in the past 18 months, to around €15.7 billion.

Business leaders fear Italians will continue to resist spending as political uncertainty continues, ahead of national elections next month.

Jacques Bousquet, president of Unrae, blamed "economic crisis, fiscal pressure on families, the restriction on credit for companies" for the fall in demand for luxury cars.

Luxury goods makers said heavier taxation on property and moves by the Italian government to ban cash payments of more than €1,000 — in an effort to reduce tax evasion — had hit wealthier consumers particularly hard.

Michele Norsa, chief executive of Salvatore Ferragamo, the Florentine luxury goods company, recently described what he called the "effect of austerity" in Italy.

"Spending of locals is more controlled," he told the Financial Times. "You have more attention to price, and more people are waiting for end-of-season sales."

However, early indications suggest that the start of January sales this weekend in Rome and Milan may fail to tempt Italian shoppers.

In Sicily, where annual January sales began earlier this week. spending is down 30 per cent compared with a year previously, and the outlook is similar in Naples, according to shop owner association Confesercenti.

"What's worrying business owners is what's in store this year," said Confesercenti's Roberto Manzoni. "By the time we're done with the electoral campaign, the elections and the formation of a new government, we're going to be almost in 2014 — without knowing how we are going to put the Italian economy and businesses back on their feet."