- by Atul H. Patel, Editor-in-Chief
As I walked the Detroit Auto Show, (NAIAS), and noticed the proliferation of luxury makes represented, I couldn't help but wonder who actually has the money to buy these vehicles. The average new vehicle purchased costs over $28,000, but there are a host of brands that charge $80,000 plus. Those divisional brands usually have entry models. After all, car companies exist to make a profit, just like any other corporation. Volume typically drives profits, so even Jaguar decided to offer the X-Type, BMW the 318ti a while ago, and Mercedes even offers an A-Class and a B-Class in Europe. These put the divisions significantly down-market. But when does a luxury brand stop being a luxury brand? If you buy an XJ for cache and exclusivity, isn't it being compromised with every X-Type that is sold? I say yes, and it's the reason that division such as Maybach and MINI are formed. Maybach steps up the exclusivity, luxury and price to separate it from a "mere" Mercedes, while MINI allows for a cheaper (FWD) BMW ultimate driving machine type vehicle without diluting BMW's brand image. Speaking of BMW, if they sell 53,000 5-Series in the U.S. per year and a KIA Rio sells 30,300 units per year, which is more exclusive? This is especially noteworthy in markets like California where you see more BMW's than you see Chevy's.
So, it's time to reevaluate our definition of luxury when it comes to mass market items. When the ante gets upped with what luxury is and what brands define luxury, then it gets confusing for the manufacturers as well as for the consumers. In "the old days", it was much simpler. A Mercedes was expensive and unattainable for most. But now, A C-Class can be had for the same price as a partially loaded up Accord. A fully loaded Accord could cost even more. Which is more luxurious? This is debatable. And when a Lexus ES is so similar to a Toyota Camry, what are you really paying for? Better service is one thing, but then you have to deal with the luxury brand dealer snootiness. You'll notice a lot of parts sharing between Nissans and Infinitis. This just dilutes the distinction. Eventually people may begin to notice to the detriment of luxury brand profits. As luxuries become mainstream, efforts are needed to retain the distinction. Exclusivity counters the basic tenet of business that selling more is better. But car companies have to show restraint with the prospect of short-term greed.
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