Big spenders, start your engines.
The roaring sound of motorcycle engines have been calling out to big spenders. After slower growth during the recession, sales are turning around and efforts to coax more women into the category are gaining traction.
Harley-Davidson reported Tuesday morning that it swung back into the black, with earnings that topped Wall Street estimates on a 12-percent increase in sales. President and CEO Keith Wandell says the growing sales in the U.S. reflect improved confidence among American consumers.
Rival Ducati, whose bikes also have a hefty price tag, reported sales increased 43 percent in North America last year. The record sales also had another distinction, North America became Ducati's largest global market — the first-time ever its home market of Italy was trumped.
In a world where most of luxury demand is growing from Asian, especially China, Ducati and Harley-Davidson’s exposure in the domestic market speaks loudly of the ultra-wealthy. The richest of the rich, or the "one percent" as many refer to, are exempt from trends that follow the economic indicators and spending habits diverge from the average Americans.
New Products Drive Sales
To sweep up these eager high spenders, Ducati says it continues to invest not only in rolling out new showrooms in the U.S., but also in its product line.
“One of the strategies that we have added that was successful was whatever the situation the past year was, we continue to invest in product development," Dominique Cheraki, Ducati North America Head told CNBC. "That has been really important.”
Indeed, sales of its Diavel, which debuted last year, and the Multistrada, which launched in 2010, helped drive its performance.
Although the demand is growing, Ducati says it hasn't always been a smooth drive combating the global slowdown. While the biggest spenders in the U.S. economy continue to spend, those that fit the profile of the top 20 percent, which account for 40 percent of all consumer spending in the U.S., have not.
This trend has shown up in other recent earnings reports. The makers of Cartier and Vacheron Constantin watches are also capitalizing on the top tier big spenders as well. Just last week, ultra high-end luxury goods company Richemont reported a 24 percent growth in third-quarter sales.
"Strength remains at the high-high end, because the ultra-rich haven’t lost anything," says Pam Danziger, founder of Unity Marketing and author of "Putting the Luxe Back in Luxury."
Better Days Ahead?
"The motorcycle market has been automatically affected by the drop in economy for sure, but we’ve secured very good numbers during this difficult time, and we are seeing the light at the end of the tunnel,” said Cheraki.
Competitor Harley-Davidson is also keeping a cautious eye. “While we are encouraged by the retail sales trend, we continue to keep a close watch on the marketplace and remain cautious in our expectations for 2012,” Wandell said in a statement.
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