Manufacturers Redefine Luxury

[pj8708]

This article claims that the consumer is redefing the luxury car market and that the manufacturers are responding with a strategy to position a 28-30k auto as a legitimate luxury vehicle.

What DOES a car have to have to be in a luxury line?? Comment.

Paul

http://autos.aol.com/article/are-american-car-buyers-really-re-thinking-luxury/?icid=main%7Chtmlws-main-w%7Cdl8%7Csec1_lnk3%7C207256

[SW03ES]

I think the guy is right, although you can't really give a lot of credibility to someone who refers to the top line Lexus as the "LS400" , a model it hasn't been called for going on 12 years now.

But I think he's right, I said some time ago that once this all settles down its not going to be as cool anymore to flaunt wealth, driving luxury branded cars, belonging to country clubs, etc. Its a different world and in a lot of ways I think our generation of people are going to be more similar to those who came of age during the depression, less apt to part with money because we know how easily money can just evaporate...

So...I think the future is bright for cars like Hyundai and Buick.

I can tell you I am a lot less interested in $1200 LS lease payments than I was before the recession. Had it not been for that, I'd have gotten an LS460 this time instead of another ES. I could afford it...but in a lot of ways its lost its appeal. I'm quite happy socking that additional $600 a month into my retirement accounts. I don't know if I'll ever buy one at this point...

[pj8708]

Taste have change in recent years, but not for altruistic reasons. Boomer's didn't suddenly decide that driving luxury cars wasn't cool. They either lost their job and couldn't buy one, or kept the one they had and drove it a lot longer.

People like luxury anything. True, some eschew opulence and garish just for the sake of being ostentatious, and want a simpler and more realistic life style. But many like to be pampered and treated to creature comforts even when their driving. Homes built during the housing boom where not modest bungalows, but four and five bedroom Mc-mansions with three car garages, one for the riding lawn mower.

"How much did it cost?" Almost the first question someone ask when they see your new "luxury" car. Price is always related to luxury IMHO, and in marketing history. If I showed you two diamonds, the same carat weight and cut. One was $2,000., the other was $1,850., which would you think is the better. If you were told that the $1,850 stone was laboratory created, flawless, same color and clarity would you buy it, or would you think the natural stone superior. A Hundyi started out as a low cost auto with reliability problems. They have changed. But, in my mind when I see that badge I still think cheap and I don't think of it in the same breath as Lexus.

People will always buy the best when they can afford it. Since the industrial revolution, at least, the best as always meant the most expensive. It assumed that it always cost more to make the best. Again, in my opinion, all auto manufacturers want to be in the luxury car market because that is where the most mark-up is. They need the profits. The downside is that the luxury segment will get so blurred and fractured that someone will have to fail miserably.

For me, there is no prestige in paying too much.

Paul

[nc211]

I think some of this has to do with the CPO market as well, especially in a recessionary economy. For me, I don't ever see me buying a brand new car again, not when I can buy a used one with the same financing mechanics as the new ones, same warranty coverage, all at the "market" level of value instead of the manufacturers definition, which we all know how that value holds up once you "title" the car for the first time. The financing part is key though for this to work for me. In a nutshell, buying used cpo then financing for 6 year terms, which is what I do, is basically like leasing the car, without the "turn in" hurdle. I have yet to ever come close to being "flipped over" with this strategy, with the only requirement being that I keep the car for 12 months. After that, the value and loan balance begin to spread out, giving me enough equity room to trade it for another.

Only vehicle that I would personally consider buying new, would be a Toyota V8 SUV. For my family, that vehicle represents the vehicle you buy with the idea and need to keep it forever. We bought our 05 in 07 wit 53k miles. Has 90k now, and will have that vehicle for a long long long time. In my eyes, these types of vehicles are family "tools", not driving preferences.

[nc211]

.

[1990LS400]

When it comes to sedans, my view is that the most important aspect is a large and comfortable interior and particularly a rear seat area in which its occupants can really stretch out. Whether an LS460L with the executive rear seating package could be consider to be a "luxury car" is debatable.

Attached are photos of what I consider to be "luxury sedans".

[SW03ES]

Taste have change in recent years, but not for altruistic reasons. Boomer's didn't suddenly decide that driving luxury cars wasn't cool. They either lost their job and couldn't buy one, or kept the one they had and drove it a lot longer.

The article isn't talking about boomers though, its talking about millennials...generation Y, my generation. Not people who did drive luxury cars and then suddenly stop...but people who are getting to the age where they are beginning to buy upmarket cars and their buying activity. What the boomers did or didn't do is beside the point.

I mean...something's working. They sold 22,000 Genesis sedans last year. Not ES numbers, but thats something.

[pj8708]

But are the Gen "Y"s THAT different. For example, the article highlights a 38 year-old, looking to up grade from a Jeep. He has picked out a Cadillac, a Chrysler, and a BMW. Very traditional, boomer aged cars. True, Caddy has made some significant styling moves, but the badge is old school.

After the great depression began to recover toward the end of the 1930's and the subsequent war, the following prosperity brought on a return to the enjoyment of new goods and expensive luxuries, and once again people could afford them. In my mind, as we turn the corner from this mess were facing now, and we will, people will once again purchase luxury. But, perception is reality. You are right in that what the "Y"s perceive as luxury is up for grabs. Whether or not Country Clubs still exists, people like to be seen in nice cars.

As you and I have said in other discussions, that logo on the hood is a symbol of hard work and achievement. It has nothing to do with being better than anyone else, or feeling superior. To me it means I was able to accomplish in one part of my life, some moderate success and I pampered myself for it.

When I look at BMW drivers passing me on the road, or Mercedes C class drivers, there seem to be a good representation of what I classify as 30-45 year olds behind the wheel. (Yes this is unscientific). The BMW lot is across the street from the Lexus dealer, and when I drive by,once again there are younger buyers looking around. Gen "Y"s buy technology toys, at almost any price asked, and as soon as the newest release comes out, they buy again, price no object. And the way retail is shifting away from marketing to the older market and to the young, again at extreme price points, I doubt that luxury car manf. are in peril. But, someone like Lexus may have to ramp up there styling and come out with new looks more often than every five years.

Paul

[pj8708]

When it comes to sedans, my view is that the most important aspect is a large and comfortable interior and particularly a rear seat area in which its occupants can really stretch out. Whether an LS460L with the executive rear seating package could be consider to be a "luxury car" is debatable.

Attached are photos of what I consider to be "luxury sedans".

Geeez Jim!! We didn't know you had a private jet! LOL

[SW03ES]

Gen Y's are a very different demographic, and we really won't know how that effects what they buy until they start to become the primary consumer in the marketplace. I agree people want to be seen in nice cars, but what is the definition of "nice" going to be?

[pj8708]

Gen Y's are a very different demographic, and we really won't know how that effects what they buy until they start to become the primary consumer in the marketplace. I agree people want to be seen in nice cars, but what is the definition of "nice" going to be?

I think you hit the nail on the head. NO ONE knows what the Echo Boomer's will be like, and as you say, what is the definition of nice or "Performance" for that fact. Based on the article, it would seem the auto marketing gurus have at least recognized a shift in the landscape, but I was just reading an excerpt from Wikipedia on Gen Y demographics, and it sounds as though when those people become the primary consumer as you say, I think it could be a very fragmented marketplace.

Sure glad I don't have to figure it out.