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Opinion
Edward Niedermeyer

Is There Such a Thing as Too Many Ferraris?

Strong demand for luxury cars has lured automakers into flooding a market that is, of course, intrinsically limited.

So, which model is prettier?

So, which model is prettier?

Photographer: John Parra/Getty Images for Ferrari)

In many ways, this is a fantastic time to sell luxury cars. With a bull market boosting household wealth and easy auto credit enabling buyers to upgrade to more expensive vehicles, it's never been easier for automakers to expand profit margins on the back of brand status. But this also raises fundamental challenge: how to stand out in an increasingly crowded field.

On the one hand, strong demand for premium and luxury cars has lured automakers into flooding a market that is, of course, intrinsically limited. Every brand, from Ferrari on down, now plans on expanding its offerings -- trading the segment's key differentiator, exclusivity, for short- or medium-term profits. Whether it is well-established brands such as Mercedes or Porsche offering more attainable products (the CLA sedan and Macan crossover, respectively) or less-elite brands such as Jaguar, Infiniti, Volvo and Cadillac attempting to boost their status with major investments in new premium products, every automaker has high hopes for volume and profit growth. There are simply too many new products to allow everyone's growth plans to succeed. Something has to give.