By Tom Libby, Associate Director, Industry Analysis and Loyalty
Solutions and Cecilia Simon, Consultant
S&P Global Mobility analysis finds some surprising trends
among vehicle registrations for ultra-wealthy households.
Ultra-wealthy households in the US aren't buying the types of
cars you might expect.
Instead of expensive vehicles like Lamborghinis and Rolls
Royces, the most popular car acquired by these households in the
past six months has an MSRP under $48,000. Further, one of the most
popular segments is a mainstream segment.
These are two of the findings emerging from a review of the
S&P Global Mobility purchase behavior and demographic data of
the top tier of US households. Our analysis combined income data
from the Census with vehicle registration and loyalty data from
S&P Global Mobility. This allowed researchers to categorize
household incomes into tiers and apply these insights at various
geographic levels, including zip codes.
There are nine zip codes in the US with an average household
income in the top tier, $500,000 and more. There were 414 retail
registrations in these zip codes (one zip code did not have any
registrations) in the first six months of 2024.
At the state level, California, Florida and New York account for
92% of these wealthy households, with Nevada, Wyoming, Kentucky,
and South Dakota making up the remaining 8%. The three leading
states' high ultra-wealthy household mixes are driven by robust
representation in the New York City, San Francisco, and Miami/Ft.
Lauderdale DMAs.
Popular Vehicle Brands Among High-Income
Households
As one would expect, these households favor luxury vehicles, but
not exclusively. Tesla registrations accounted for almost one of
every five new registrations while BMWs comprised almost one of
every ten. The next four brands appealing to these households
include Mercedes-Benz, Land Rover, Audi, and the mainstream brand
Toyota. These six brands by themselves captured more than half
(53%) of all new registrations linked to these high-end households.
The exotic brand most frequently acquired by these customers is
Ferrari, which ranked #20 across all brands.
While these exclusive households have acquired exotic, luxury,
and mainstream vehicles, luxury models dominate with 85% of all
acquisitions, with mainstream models comprising 11% and exotics
just 4%. The six most popular models include three Teslas and one
each from BMW, Rivian and Land Rover. The most popular model across
all categories is the Tesla Model Y, with a base MSRP of $47,988.
(Tied for #7 among all models is the Tesla Cybertruck.)
Luxury vs. Mainstream Segment Purchasing
Behavior
At the segment level, new vehicle registrations among this
demographic are understandably skewed heavily towards the luxury
market: 71.5% of their registrations fall in the luxury space.
However, two of the five most popular segments — and three of
the top ten — are mainstream segments, including the Compact
Utility, Upper Mid-Size Utility, and Subcompact Utility Plus.
Not coincidentally, these are the three largest segments in the
industry, with the Compact Utility Segment by itself accounting for
20% of the new vehicle market. This huge category includes compact
crossovers marketed by every mainstream brand in the industry,
including brands within the same umbrella corporation as numerous
luxury brands.
Brand and Fuel Type Loyalty
In aggregate, this demographic is slightly more brand loyal,
with 54.8% loyalty versus 52.5% industrywide as of June 2024.
Households with a luxury vehicle in the garage are substantially
more brand loyal (60.9%) than the entire industry (49.9%), with the
former pulled up by strong Tesla representation (Tesla brand
loyalty consistently leads the industry by a substantial
margin).
Conversely, brand loyalty of those high-income households with a
mainstream vehicle in the garage is just 39.2%, far below the 53%
for all households with a mainstream vehicle in the garage.
Looking at fuel type loyalty, these high-end households are less
likely to stay with a hybrid vehicle than the rest of industry
(34.8% vs. 42.1%), but much more likely to stay loyal to their
electric vehicle (85.1% vs. 67.7%). This exceptionally high EV fuel
type loyalty is most likely due in part to these households' strong
financial positions which eliminate the challenge of EV price
premiums.
Ethnic Composition of Ultra-Wealthy
Households
Lastly, the ethnic composition of this high-end cohort includes
Asian households at 17.5%, more than twice the national average,
while both African American (1%) and Hispanic (6.8%) households
trail national averages by substantial margins. The high Asian
share can be attributed at least in part to the high Tesla mix,
given Tesla's extraordinarily high Asian mix in the first six
months of this year (28%).
Conclusion
In summary, several of the findings from this review are
intuitive, but not all. That these high-income households tend to
be clustered in California, New York and Florida makes sense. And,
obviously the New York, San Francisco and Miami DMA trends drive
the state results, though Los Angeles would also be a natural fit.
Further, these ultra-wealthy households may not want to be bothered
with the new vehicle acquisition process, leading them to simply
“get another one” of whatever is in the garage, driving up luxury
brand loyalty. Finally, one of the main barriers to EV adoption –
premiums versus same-size ICE vehicles – simply does not exist for
these households, leading to their exceptionally high EV
loyalty.
On the other hand, some findings that do not necessarily fit
with one's perceptions of this cohort include the low mix of exotic
vehicles and the relatively strong showing for Toyota. And if one
were asked to guess which model industry-wide is the most popular
with this exclusive cohort, the Model Y may not be at the top of
the list. Further, even though its vehicles are everywhere, the
Compact Utility Segment does not immediately come to mind in
discussions about the ultra-wealthy.
Lurking in the background of this entire review is Tesla. Three
of the four most popular models for these ultra-wealthy households
are Teslas; the #1 DMA is San Francisco, Tesla's former base;
Tesla's share of this cohort is a robust 19.3% versus 4.7%
nationally; these high-end homes are exceptionally brand loyal
(85.1%) when a luxury vehicle is in the garage, driven at least in
part by Tesla's industry-leading brand loyalty that varies between
65% and 75%; and, finally, 17.1% of the ultra-wealthy households
are Asian, a finding undoubtedly driven by Tesla's strong appeal to
Asians (28% of Tesla buyers in the first six months of 2024 were
Asian).
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