Some serious cars for serious money

Not since the 1930s have plutocrats enjoyed such a choice. Richard Feast investigates conspicuous consumption

For those fortunate and sometimes talented people with a quarter-of-a-million pounds to spend on personal transport, Geneva is definitely worth a detour this week. Not since the 1930s have the world's wealthiest car buyers had so much choice.

From impractical 250mph supercars to plush palaces on wheels, all are on display at today's preview to the annual Geneva Motor Show. These are the crown jewels of the car world, exotic amalgams of the best technology and materials from the finest engineers and craftsmen in the business.

If you can dream it, these people can create it for you. Their mission is to find the spending limits of the richest car buyers in the world.

There is a flaw, however. While greater choice is wonderful news for buyers, the development may not turn out so well for the companies that sell the cars.

Motor manufacturers are lavishing huge development sums on mega-money models that can be bought by a couple of thousand customers a year at most, and more usually only by hundreds. Yet none of the companies knows for sure whether enough people will want all of them.

The financial implications for all involved are profound. Even at these tiny numbers, companies may be able to operate profitably on a day-to-day basis because prices are high. But it is hard to see how they could do so if the true cost of capital for the development and manufacturing of their cars are taken into account. Those costs are usually written off at the corporate level to make the projects look good.

This is also an extremely unpredictable market. Steve Saxty, a partner at PowerBrand Associates in New York, thinks of very expensive car brands as fashion items: "There is no point having a great car if it's unfashionable in this segment of the market. The press says it, the public knows it and the buyers are directly affected by it, so it's likely there will be some losers," he says. The point is echoed by John May, founder of World Automotive Industry Trends: "It will be relatively easy to find those buyers once, but what about the following years?" he wonders.

Still, car companies know that plenty of people can afford these bespoke automotive baubles -- if they want to. They draw comfort from the annual wealth report compiled by bankers Merrill Lynch and consultants Cap Gemini Ernst & Young. It says there are more than 7 million people world-wide with investable assets (not including property) of over $1 million (£550,000), and nearly 60,000 with assets of at least $30 million (£16.5 million).

Some of that wealth is evident in all the luxury yachts clustered in the fashionable harbours of the south of France, or in the number of executive jets parked at German regional airports.

While money is not as issue for the holders of diamond-encrusted platinum cards, there is already evidence that some of the early sales optimism has vanished.

Maybach and Rolls-Royce each predicted sales of around 1,000 a year. Perhaps they will get there at some time, but last year they achieved around 600 and well below 500 respectively.

When Volkswagen bought Bentley in 1998, it talked of eventually reaching annual sales of 9,000 -- or nearly three times more than Rolls-Royce and Bentley combined had ever achieved in a year. Bentley folks are more circumspect these days. This year the company will sell around 3,500 Continental GTs and 700 to 800 Arnage limousines. Neither is the addition of a four-door Continental in a year's time likely to take the total to the mythical 9,000.

All of which raises questions about the motives for the creation of these cars. Are they commercial ventures with genuine profit potential, or are they examples of automotive machismo?

From the outside, it looks like a corporate virility contest. If the Volkswagen group can produce a Bugatti with a speed of nearly 250mph, DaimlerChrysler and Porsche clearly need to do so as well. And so do Ferrari and Maserati. If one of Mercedes' Maybach limos costs a quarter of a million pounds -- give or take a few thousand -- it is incumbent on BMW to sell a Rolls-Royce at a similar price. Whether enough customers want them is another matter. The possibility of a meltdown in the premium-price sector cannot be ignored. It would not be unprecedented.

After the Second World War, fashionable pre-war marques like Bugatti, Cord, Duesenberg, Hispano-Suiza, Horch, Isotta Fraschini, Marmon and Maybach just disappeared. Others like Cadillac, Lincoln and Packard became more egalitarian.

The result was that for many years those with serious money to spend on cars had little choice. There was imperious Rolls-Royce, a venerable firm whose ownership of the Bentley marque is largely remembered for its neglect. At the other end of the motoring scale, there was Ferrari, a post-war creation that offered extreme performance, and also Maserati, another old-established firm whose history was shaped by a series of financial crises.

What they had in common were price tags so daunting that almost everything else looked commonplace. Companies like Facel Vega, Gordon Keeble, Iso and Jensen sporadically tried to fill the premium car vacuum, but each endeavour fizzled.

Gradually, though, the picture changed. BMW, Mercedes-Benz and Porsche began to catch the establishment names in price and to pass them in technology and quality. More recently, the owners of Aston Martin and Jaguar (Ford), Lamborghini (VW's Audi brand) and Maserati (Fiat's Ferrari subsidiary) turned them into more worthy premium car rivals.

The sector was then transformed by a series of dramatic changes in the late 1990s. Volkswagen bought Bentley and began an ambitious programme to re-establish Bugatti. When BMW bought the cardivision of Rolls-Royce, Mercedes-Benz decided to respond with up upmarket creation of its own -- Maybach.

The barely-noticed effect of these changes was to shift the centre of gravity of the limousine business from Britain to Germany. Bentleys and Rolls-Royces are still assembled in Britain, of course, but the big decisions are made in Germany.

The result of all this upheaval is on display in Geneva this week. So what should the visiting hip-hop recording artist or Premier League footballer look out for?

It would be best to start with Rolls-Royce, that this year celebrates its 100th anniversary. The company promises "something quite exciting" for the show, which suggests a Phantom-based successor to its Corniche convertible and coupe.

Maybach, Rolls-Royce's most direct rival, has no big developments planned for Geneva, but Bentley has made substantial modifications to its six-year-old Arnage limousine. The £680,000 Bugatti Veyron will be present, though a would-be buyer still has to wait for the production go-ahead.

Ferrari and Porsche have become adept at parting wealthy customers from their money. In Ferrari's case, this year's big attraction is the new four-seater Scaglietti 612. Porsche's Cayenne and Carrera GT are in demand, but its 911 replacement will not appear until the summer.

The Maserati comeback continues, with the new Quattoporte limousine on sale in the UK in a couple of months. The company has another handy high-speed number at Geneva -- a 620bhp supercar that will carry a price tag of around £400,000.

Before dashing back to the waiting executive jet, though, the well-to-do buyer would be advised to place his (or her) order now. Maserati plans to make only 25. It shows just how few customers there are in this rarefied end of the car market.