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Modesty Is In; Luxury, Profit Margins Are Out

Modesty Is In; Luxury, Profit Margins Are Out

By Richard Read's avatar Richard ReadRichard Read August 27th, 2009

Diamond-studded luxury Lamborghini key fob by Amosu

Diamond-studded luxury Lamborghini key fob by Amosu

Enlarge Photo

We've all heard of the Hemline Index, which asserts that women's skirts become more modest in tough economic times. Well, a parallel in the auto industry claims that notions of good taste force a drop in conspicuous consumerism during rough money days. Case in point: in 2005, the luxury car segment made up 21% of the total auto market, but the figure has now slipped to just 15.6%. That's bad news for automakers, since luxe models earn $10,000+ in profits, as opposed to the couple hundred bucks from more modest $20,000 rides. On the other hand, douchey types who dig diamond pavé key fobs probably won't be deterred by good taste. [BusinessInsider]

Diamond-studded luxury Lamborghini key fob by AmosuEnlarge Photo We've all heard of the Hemline Index, which asserts that women's skirts become more modest in tough economic times. Well, a parallel in the auto industry claims that notions of good taste force a drop in conspicuous consumerism during rough money days. Case in point: in 2005, the luxury car segment made up 21% of the total auto market, but the figure has now slipped to just 15.6%. That's bad news for automakers, since luxe models earn $10,000+ in profits, as opposed to the couple hundred bucks from more modest $20,000 rides. On the other hand, douchey types who dig diamond pavé key fobs probably won't be deterred by good taste. [BusinessInsider]

Tags: luxury cars, sales, sales slump, Luxury



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