Ready for a $1.7 million car?
Posted
Aug 29 2008, 10:32 AM
by
Andrew Horowitz
Rating:
Aston Martin is shaking up (not stirring) the automobile market with the introduction of a new coupe that is all about the prestige. Even as the industry is in a slump, this company believes that 77 of this newest addition to their line will sell. If you recall, Ford sold off the company for a substantial loss only last year and now this yet-to-be-named car will probably become the latest trophy for the rich and famous. Come to think of it, I bet that Larry Ellison, founder of Oracle will be one of the first in line as he will be in looking to spend some of that estimated 37% pay raise he is slated to receive.
Of course, Ellison deserves the $72 million annual salary, possibly even more than Merrill Lynch's John Thain who is reported to be making upwards of $74 million per year. I am unsure who will get one of these beauties first, but the real question is whether they are going to buy or lease....
Ironically, Chrysler today announced that they are considering selling off its sporty Dodge Viper nameplate in an attempt to control some of the bleeding. That is on top of the recent request from Ford and GM for $50 billion in loans from the government in order to explore more energy efficient cars. Confused?
The ugly truth is that the auto industry is not only having trouble with delinquencies and defaults, they will see difficult times ahead as consumers are slowing down their spending. What's more, the industry is clearly having an identity problem.
So, while Aston Martin may sell 77 cars to the ultra-wealthy and bring in revenues of $130,900,000 $1.3 billion, it is clearly not going to be as easy for the traditional auto companies to sell out their inventory.
Related Reading:
How to Fix the U.S. Auto Industry
Ford Shareholders want out
Andrew Horowitz is a money manager and the founder of Horowitz & Company. He is also the author of the bestselling book, The Disciplined Investor . Check out his latest investment idea or listen in as he hosts, The Disciplined Investor Podcast.
