High Net Worth Individuals in Malaysia: How Have their Lives Changed?

The car industry is often seen as a barometer of the world economy, and it has stormed into a deep recession with sales and profits tumbling in almost every other country. The same situation is occuring in Malaysia, where we see a consistent contraction in car volume sales in the past 2 years. But what about luxury cars? Have the wealthy changed their spending behaviour as well?



Both BMW and Mercedes seem pretty optimistic for this year. A check on luxury car sales figures (source: Malaysia Automotive Association) shows us that sales have been either stable or growing for the past 3 years, and sales for the 1st half of this year has so far been pretty close to figures achieved for the 1st half of last year. So why has nothing changed despite the estimate of 20% decline in wealth for the HNWIs as reported by Merill Lynch/ Capgemini?

Shafie, a sales consultant at a BMW authorized dealer has this to say, "They can't afford not to upgrade their car when the time is due, be it during a boom or a recession. I can tell most of our customers purchase their cars not for the driving experience, but rather as an essential business investment. The bulk of our customers are local businessmen owning several companies. The average Malaysian businessman needs to make a statement with his car and his Rolex watch; he is doing well in his business, hence hand him the contract". He added, "I guess that is why we see quite a high number of cases where luxury cars are repossessed and auctioned off.".


Observation: Though it may seem like a superficial practice at first, what these businessmen are practicing is in a way, quite similar to a well chanted mantra in our industry; Advertising pays in a downturn.