Luxury Car Market on a Q4 Bull Run After Punishing 2022
The luxury car market is a lucrative and growing industry, with a current market size of approximately $78 billion. It is expected to experience a compound annual growth rate of 5.4% from 2020–2025, driven by factors such as increasing disposable incomes and consumer demand for high-end, exclusive vehicles. However, the current macroeconomic landscape has had a significant impact on the performance of luxury car manufacturers. The COVID-19 pandemic has disrupted global supply chains and caused economic instability, leading to a decrease in consumer spending on luxury goods. This has had a negative effect on the share price of companies such as Rolls-Royce (LSE: RR), Ferrari (NYSE: RACE), and BMW (XETRA: BMW).
Rolls-Royce, a British luxury car manufacturer known for its opulent and prestigious vehicles, has seen its share price decline significantly in the past year. The company has been hit hard by the effects of the pandemic, with lockdowns and travel restrictions leading to a decrease in demand for its high-end automobiles. Rolls-Royce has also faced challenges in its supply chain, with disruptions to its manufacturing processes leading to production delays. These factors have contributed to a decline in the company’s share price, which has fallen by around 27% in the past year.
Ferrari, an Italian luxury sports car manufacturer, has also seen its share price affected by the current market conditions. The company has faced similar challenges as Rolls-Royce, with disruptions to its supply chain and a decrease in consumer spending on luxury goods due to the pandemic. In addition, Ferrari has faced increased competition from other luxury car manufacturers, which has further impacted its share price. Despite these challenges, the company has been able to maintain a relatively stable share price, with only a modest decline of around 20% in the past year.
BMW, a German luxury car manufacturer, has also been impacted by the current market conditions. The company has faced challenges in its supply chain, with disruptions leading to production delays and reduced output. In addition, BMW has seen a decrease in demand for its vehicles due to the economic downturn caused by the pandemic. These factors have contributed to a decline in the company’s share price, which has fallen by around 10% in the past year.
Looking ahead to the holiday season, it is difficult to forecast how luxury car manufacturers will be impacted. On the one hand, the holiday season is typically a time of increased consumer spending, which could benefit companies such as Rolls-Royce, Ferrari, and BMW. From the charts, it looks like RR, RACE, and BMW have already begun to witness a Q4 boon, with all three companies’ share prices up nearly 10% after bottoming out YTD at start-Q4 in October. As the current recession deepens and consumer spending slows moving into Q1 2023 these stocks may be in for a reversal, but at the moment shareholders are enjoy a nice Santa Claus rally.