When the economy’s going down, the next logical step is to go out and buy a new Porsche — right?
Well, in Russia right now, yes.
According to a new report by Bloomberg, Russians from all financial backgrounds have started buying fancy sports cars to protect themselves against the crashing ruble, which has the potential to destroy their savings.
In the last month alone, Porsche and Lexus sales surged by 55% and 63% respectively, according to the report.
So why is this happening?
As the ruble continues to devalue, Russians are starting to get nervous about their savings. Right now, 1 million rubles in savings is worth $US18,600. And that number’s dropped by $US4,650 since November 1.
Basically, Russians are looking for a way to protect their savings.
“In times of crisis, people view cars as an investment,” Andrei Rodionov, the head of corporate communications at Mercedes-Benz’s Russian unit, told Bloomberg. “The rule of thumb that a car loses 20% of its value once it leaves the showroom isn’t valid anymore.”
Over the last several months, the Russian economy has taken a serious beating following the sanctions imposed by the US and the EU, and the dropping oil prices.
The ruble is down.
And inflation is up.
But car prices have been relatively resilient to the economic pains. Prices have only increased by 5 to 7% in the last quarter, according to Bloomberg. So, to put it simply, it’s smart to buy cars right now.
“The urge to spend is about dealing with the blues of high inflation and a declining currency,” according to the Bloomberg report.