For a growing class of customers, even the highest priced products don't have enough curb appeal if they come from a high-volume carmaker. "BMW has a broad range, but some people will find it's not differentiated enough," says Xavier Mosquet, head of the auto practice at Boston Consulting Group. Rolls-Royce, a brand owned by BMW, might command a fraction of the business of its corporate parent—but Rolls is also there to welcome those who feel compelled to trade up from a mere 7-series sedan. Meanwhile, much of the spoils from the boom in ultra-luxury sales are being split between Fiat Chrysler, which owns Ferrari and Maserati, and Volkswagen, which has Bentley, Lamborghini, and Porsche in its high-end garage. 

The boom in business, for the most part, comes from a simple supply-demand relationship: Growing ranks of wealthy consumers want more opulent toys. At the end of last year, about 211,000 people had a net worth of at least $30 million—a 13 percent increase from 2011, according to UBS and the research firm Wealth-X. For a person worth $30 million, purchasing a car for a mere $100,000 isn’t a weighty decision. It’s akin to the median U.S. consumer with net worth of $45,000 swinging by the used car lot and dropping $1,350 on a well-worn Pontiac Aztek.

If a car executive widens the target market to those worth at least $10 million, the population of possible customers hits almost 700,000. “The number of people being able to enjoy a luxury product is not a limiting factor,” says Christophe Georges, director of marketing and product strategy at Bentley. “The market has the potential to go far beyond where it is today.”

David Fuller's view

This article provides some of the clearest evidence that the global economy is not only recovering but that fears of destructive deflation are greatly exaggerated, as I have often stated in recent weeks.

There is plenty of deflation but most of it is of the positive variety, thanks to accelerating technological innovation.  This is an increasingly large contributor to growth in corporate profits worldwide.  Technology also has a downside, mainly in the form of unemployment, as we are also seeing. 

Investors can continue to do well by backing GDP growth.  BMW (est p/e 12.58 & yield 2.28%) mentioned above, in which I have a personal investment, is temporarily overextended but still very competitively priced.  BMW also appears to be selling more Rolls-Royces than ever before, judging from one of the graphs in the article above.

Volkswagen (est p/e 9.51 & yield 2.14%) functions as an automotive conglomerate, according to Forbes Magazine, with close links to Audi, Porsche, Lamborghini, Bentley, Bugatti, Ducati, SEAT, Skoda, MAN and Scania.  

Daimler (est p/e 12.22 & yield 2.83%), is the third of these three big, prestigious German automobile companies.  It is similarly temporarily overextended but nevertheless attractively priced.  These three shares are also benefitting considerably from the very competitive Euro, shown here as USD per 1 EUR.