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High End Luxury Cars

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  • greenbeltgreenbelt Posts: 55
    Designman,

    You too are falling prey to the backwards thinking that I addressed in my last post.

    You are right, that people DO NOT buy the car because of the financials, but because the cars are to them stylish, well-made, with good performance.

    The fact that Toyota does such a good job meeting the markets needs and is so profitable is a measure of how well they are doing satisfying the market. They don't need to crow about their financials, Wall Street does that for them.
  • Merc:

    I have said many times in the past that the S class is better looking then my 01 LS

    I don't think so any more...as time as gone by the Mercedes design has worn thin on me....I hate those big round headlights for example...

    It could be that the Mercedes design continues only because they don't have the money to make major styling changes. We know sales are falling. It would seem a great styling company would have come up with a new look by now.
  • ljflxljflx Posts: 4,687
    It got lost in all the news but Eckhard Cordes - CEO of Mercedes itself - also resigned on Thursday. That was a resignation the supervisory board did not want to happen. Cordes was expecting the top job and resigned out of disgust for not getting it. I wonder if the board will be able to talk him out of it. But wounded German pride is not easy to heal.

    Separately in all the coverage on this story were other reports that the German manufacturing industry as a whole, is looking more and more toward American business managers to lead it. Many Americans or Germans with heavy long-term American experience are being promoted to top or very high level exec jobs that will lead to the top. Zetsche is in the latter camp with predominantly long-term American experience. That tells you the Germans are recognizing they have large scale manufacturing problems and are trying to fix it with new and different leadership. Both GM and Ford were looking at him for their CEO positions when DCX promoted him.In fat that is what hastened the promotion.

    There have been many stories about European manufacturing businesses needing an overhaul over the past few years as its historical processes of long-term vacations and little chance of being fired are creating a stale workforce that is inefficient and lagging behind the rest of the world in quality. That and the need for strong leaders with union negotiation strengths is causing the switch to execs with heavy American experience.

    Now Merc has always overstated my use of the business end - stating that you walk in and buy a Lexus because of Toyota's bottom line. My point has always been that negative press can and sometimes does affect a buyers decision. Business people who can't possibly miss these stories are heavy buyers of lux goods. When you read a lot about quality problems, see proof of it in surveys everywhere plus in underlying financials it makes you think. Then when you read many stories about European manufacturing problems beyond autos it makes you realize this is deeper and more widespread. So why eaxctly would you run in and buy expensive Euro equipment. I had a Miele dishwasher and vaccuum that both died on me after 5 years vs. American counterparts that were still working fine after what seemed like a forever period. At the same time that I bought the Miele I also bought a new expensive Euro washing mavchine. Within three years I needed a $350 repair on that. I'm not even sure if Sub-zero is European or not but it has cost me $600 over 10 years of ownership and everyone I know (myself included) has serious humidity problems with them in summer. Something has gone wrong in Europe as my own experience, the auto surveys and all these stories about change imply.
  • pablo_lpablo_l Posts: 491
    Schrempp's separation is harsch. No thank yous from the Board of Directors, no package as he leaves (not that he needs one, he's hogged stock over the years).

    Very questionable executive practises that I read in a German newspaper: Schrempp had married his chief executive assistant, who kept working for him in the same position, and paid her about $250k, whoch seems rather rich, even for a top company. Worse though is the fact that he worked from a remote satellite office in Munich, and not it the Stuttgart HQs, because she was from Munich and preferred to live there.I wonder how many CEOs of top companies telecommute on top of their busy travel schedule...

    The different brands in the holding company have to focus on core competencies, and either be market leaders or be gone. As far as Mercedes goes, I disagree it has to focus exclusively on up-market, expensive cars. What it has to focus on excellence, and cars that carry a significant premium over their competitors' offerings based on the combined strength of the brand *and* the product. It doesn't need to go up-market - it is up market enough, and other brands show that luzury brand offerings in more entry level markets are very profitale offerings when they indeed deliver on some core brand DNA.

    As to Smart and Chrysler, I am no expert on the former, but the latter has to gain far more global significance. Chrysler is doing some cool stuff, but still has way too much US focus, which puts it at a disadvantage in a global market. Perhaps combining Smart and Chrysler in some way is what would make the most sense.
  • ljflxljflx Posts: 4,687
    The picture I see in this months Motor Trend looks bad, worse than the ones posted here. It almost seems MB has become Japanese influenced on styling. The S starts to look like an Acura RL to me and a pix of the the next C has way too much of a Honda Accord look. Even this excerpt on MT comments link in Japanese styling - "the large creased and flared fenders are a surprise. They were well hidden under spy-car camouflage and will remind you of a Mitsubishi Endeavor or outgoing-generation Eclipse."

    Maybe that Mitsu relationship was even more damaging than was thought.

    Merc - don't you have an Eclipse?
  • ctsangctsang Posts: 237
    Why does one want to buy all their cars from the same company thoughout one's lifetime? Sure Lexus doesn't make cars costing $100K or more. But if one wants to buy one, they don't have to go to MB. There are even more prestigeous brands out there than MB at those prices. There it goes again, among the cars that Lexus offer, they beat MB class for class. So don't compare cars Lexus does not make i.e. AMG car lines. I even bet you: if Lexus makes cars costing $100K or more in the future, they will still beat MB class for class.
  • sysweisyswei Posts: 1,804
    An article in tomorrow's NYT...it is in print but not on the web yet so I can't link to it...is quite negative on the mpg achieved by the rx400h. Basically it suggests that based on the reporter's testing of a rx400h and rx330, there is essentially no mpg benefit.

    Contrast that to a WSJ article from a couple weeks ago:

    The Lexus 400h was the most expensive vehicle we tested, but also the quietest. We drove it from Detroit to the tip of Michigan's thumb, mostly on state highways, clocking just over its EPA highway estimate of 27 mpg. To give it a little stop-and-go traffic, which is where the Toyota hybrid systems excel, we also endured downtown Detroit rush-hour traffic. In those six miles, the Lexus averaged 34.9 mpg, well above its 31 mpg city figure from the EPA

    Basically I think that if a reporter wants a "story" they'll end up driving either very wastefully or very frugally, and can make the mpg come out either low or high.

    I am still waiting to see a good test. What I have in mind is a large number of miles driven "nose to tail"...meaning a rx400h and a rx330, with one tailgating the other, and occaisionally switching positions or drivers. And also making sure that the 400h begins and ends the test with the same level of battery energy.
  • designmandesignman Posts: 2,129
    "It almost seems MB has become Japanese influenced on styling... Even this excerpt on MT comments link in Japanese styling..."

    Merc... another hangin' slider from Camp Lexus... jump on it man!!

    ;-)
  • maxhonda99maxhonda99 Posts: 1,289
    "I am still waiting to see a good test. "

    You don't have to look far for good tests. There are plenty on the RX400h and RX400h fuel economy boards that will give you gas mileage figures. Some have even compared it to their previous RX330. Generally people are getting in the mid 20s average while they were only getting 17-18 with the RX330.
  • ideleidele Posts: 200
    The NYTimes changed many years ago from a newspaper to an opinion journal. All of ther stories are slanted to their particular views. Obviously they don't like the Lexus hybrid and the article was written to suit that view.
  • sysweisyswei Posts: 1,804
    I have looked at some of those comments. Some are getting mid-20s or even better, but others are not. And I suspect that some of the mid-to-high 20s results reflect driving habits that changed once the driver owned a 400h and started watching his gauges. I would still like to see a controlled test.
  • lexusguylexusguy Posts: 6,419
    Even if there is no benefit, every other competitor that uses a V8 instead of a hybrid setup cant come close to the RX400 in terms of mpg. I think thats what Lexus was trying to do, show how much more efficient the RX400 is than say an ML500 or Toureg V8, which get maybe 15mpg. The RX400 has reasonably competitive acceleration, and 1.5-2x the gas mileage.
  • ljflxljflx Posts: 4,687
    Remember it's the next gen battery that will debut in the LS that will shoulder more of the burden in highway driving. That battery will improve gas mileage appreciably while providimg a major powerboost. Lexus has said all along they are going the power route and will wait for future batteries to truly improve mileage. Toyota will take the green economy route. In the meantime Lexus is doing exactly what Lexusguy is saying - adding power and some mileage (particularly city). You are buying much more efficient power in stepping up to a hybrid than you would if you stepped up to a V8. It's also why I never understand the ROI that people keep calculating. If you buy a bigger engine you pay more. Well guess what, a hybrid is a different kind of bigger engine.

    The NY Times is no fan of Lexus. Remember the woman (I believe her name is krebbs) that reviewed the LS430 and preferred a 2 year old Maxima a few years back. Her review was so bad you couldn't even take anything she said seriously. Her comments led you to believe that she despised luxury cars, which than made you wonder why she was reviewing one in the first place.
  • ctsangctsang Posts: 237
    Why bought up the auto review from NYT? For God's sake, read it may be for the news, not for autos. Please ignore and drop it.
  • blckislandguyblckislandguy Posts: 1,150
    Over the weekend I went to Montreal. Nice trip, about 6 hours or so from RI blasting along the Vermont-a-bahn at 85 MPH plus. (If you went any slower Andre in his Peterbilt with Quebec plates would nerf you out of the way. In any case, how many Vermont State Troopers do you think they really have on duty in the whole state at any one time? Four?)

    On the road my mind drifted to high end luxury sedans. I thought lets forget about depreciation, deltas, brand dimunition, etc. and just think like an ordinary guy with a few bucks in his pocket who wants a high end sedan for trips just like the one I was on. How much is it going to cost to get into one? Maybe to keep the cost down we'll look at a used one with normal equipment and miles. Take a look at the chart below using 2002 figures:

    MAKE Edmunds Private Party Sale

    BMW745i 42,090
    BMW745Li 44410

    JAG XJ 21371
    JAG VandePLas 27189

    LEX LS430 36958

    MB S430 35436
    MB S500 39556

    Wow! Afterall the talk about i Drive and what an impossible imposition it is, a 2002 BMW 7 Series is the most expensive. By far. This is the car that everyone bashes yet the secondary market pays up for ?? What gives? Afterall all the talk about rotten MB quality, you are still on the hook for 35 to 39 large for a 2002 S series. The Jag data has been commented on a dozen times and the Lexus figures can be read in different ways. (They hold their value as a percent of new MSRP vs. why buy a used Lexus when you can get into an equally used MB Series?, etc.)

    Maybe the sleeper is Jaguar. The resale is awful. BUT, as the average guy in this example would you rather a new design 2004 Jag XJ sedan for $39046 (Edmunds Private Party) or a MB/LEXUS with two more winters and 30,000 more miles on it for the same price? I think if I were going to put a lot of interstate miles on a car I'd opt either for a 2002 MB S430 or a 2004 XJ.

    YMMV
  • anthonypanthonyp Posts: 1,857
    As we were getting ready to either get a bmw wagon or lexus H, last Saturday we were in both dealerships....We ended up with bmw as Lexus interior left something to be desired imo...While in bme shop I checked out the interior of the 7..Not to fond of exterior....One thing I particularly liked was the seat, as the top quarter of the back sort of tilted in or out...They were far more comfortable than my ls seats.....I would suggest everyone really check out the Mercedes and BMW and Lexus, if they are really interested in improvements...Of course I didn`t even know about some of the things that have been done in the last few years as I haven`t been in to check the hardware out...As everything is subjective, I only mention the seats as that is important to me on a long trip.... Tony
  • ljflxljflx Posts: 4,687
    To clarify - you mean how much will a 2002 cost a buyer in a private party sale.

    I was looking at how much retention value there was from the original MSRP for the original buyer when I did this. If you used a LS430 ultra - which is probably the right car to use - its' cost would be noticably higher than the Benz at around $43K. The initial MSRP's of both the ultra LS and the 745LI are about $71 on the Lexus and $77 (not sure of exact Bimmer price) on the 745LI. I'd never even think of buying the MB after 3 years. It's reliability is killing it's resale value which is why the price is so low. The Lexus would be very desirable for the exact opposite reason. The 7 is probably noticably higher up on the totem pole than an S because of its sportier heritage I'd assume. There is also less supply as the S outsold it by about 20-25% when new. I think BMW is definitely the premier used German car after three years. Used car buyers are nnot interested in paying the price of status that isn't backed by reliability. But they'll stioll pay for sport. At some point in the near future BMW will become the premier new German car if MB doesn't get its act together soon. I didn't realize Jag dropped that rapidly. That is horrendous.
  • ljflxljflx Posts: 4,687
    Fourth best ever month of the year for Toyota - even in the face of huge discounts by GM, Ford and Chrysler. Lexus on track to top 300K unit sales and the GS remains hot.The IS is going to come out of the door like gangbusters and will fuel things more.

    http://pressroom.toyota.com/photo_library/display_release.html?id=20050802b
  • oacoac Posts: 1,594
    Len:

    In June, Toyota/Lexus announced they were raising prices across the board

    http://www.caranddriver.com/article.asp?section_id=30&article_id=9780&page_number=1

    On the opposite side, GM, Ford and DCX are lowering prices, and yet Toyota/Lexus continues to ramp up the $$$.... What could be the reason(s) for this opposite trend ???
  • sysweisyswei Posts: 1,804
    Toyota's CEO was making noises about a month or two ago about giving Ford and GM some breathing room. The idea is that if the domestics run into serious trouble, there could be a political backlash against Toyota.

    The Koreans don't have to worry as much because they have smaller market share.
  • ljflxljflx Posts: 4,687
    I know - virtually no discounting vs huge discounts and they have their best sales month in history. On top of that it is the fourth time this year they've now made that statement. So in 7 months of 2005 they have their top 4 US sales months in history - and they made $13bln net last year when exchange rates were worse and sales were lower. That's a juggernaut in every sense of the word. I'm glad I'm not their competition - in any segment. They just have too much quality. A NY sportscaster - Mike francesca on WFAN - refused to right off the Houston Astros when they were a dozen games under 500 because they had too much pitching. Likewise Toyota is just too much quality and value at this point in time. The bad side of this is that it allows for higher prices.
  • kdshapirokdshapiro Posts: 5,751
    I bought my first Toyota in 20 years last year. I would not have bought it had it been for the generous rebates. It's a great vehicle if I ignore some of the rattles/squeaks and some other issues. The rebates bought the quality/value ratio down to a factor I could live with. In a certain sense, they are just as overpriced as their German counterparts. But I enjoy driving the German competition.

    I would not pay MSRP+ for any car.
  • blckislandguyblckislandguy Posts: 1,150
    Yes, I was looking at how much Joe average with a little bit of cash would have to spend to get into a late model (i.e, 2002) high end sedan for summer trips.

    Sorry, Edmunds doesn't give data for 2002 Lexus LS430 Ultras.

    I think you have identified nicely how a high end car retains value: it its unique selling proposition (thank you David Oglivy for the concept) , e. g., reliability, sport, status, design holds up, its resale will be good. That notion explains the resale of Lexus and BMW.

    One thing holding up the MB resale is the perceived status in owning one. But even that is weakening. Forty years ago, when a guy made Sergeant First Class (E-7) or better, he bought himself a Caddy or a Deuce-and-a-quarter ( a Buick 225). The thing would be standing tall, shined like a pair of jump boots. I suspect that if you drove past the 82nd Airborne's NCO Club tonight you would see more BMWs and Lexus out back than MBs.
  • oacoac Posts: 1,594
    Aha.... that explains it.... Toyota is trying to slow their sales down to help their competition.... I am wondering if there is any other industry segment that such will happen. That a juggernaut decides to *purnish* itself to help its competition !!! Could this be cultural or purely business ? cos I doubt a German company will do that if in the same situation.
  • oacoac Posts: 1,594
    There is a key point made n ljflx's previous post. That one needs to compare resale values to MSRP of each car in order to get a better re-sale valuation. Len has also provided some numbers on BMW 745iL v LS430 UL v S500 and has shown that resale, as a factor of MSRP, is lowest for MB, about same for BMW and Lexus. Meaning: The 745i does not have a higher resale value than the LS430 despite the *higher* offer price on the former. Besides, the 2002 745i is one of the most unreliable Bimmers out there. So its *asking* price may be higher, the real re-sale price may be far less due to the specific issues that plagued that year 7-series. Terry on the "Real World Resale" forum can best peg these prices much better for us... He is a dealer and buys and sells tons of these cars daily...I'd wager that actual *buy* prices for a low-miler '02 745i will be <$40K, barely a deuce higher than comparably-equipped '02 LS430.
  • ljflxljflx Posts: 4,687
    I haven't heard a rattle in a Toyota/Lexus yet and there are 10 in my immediate family. I've lost count of the Toyotas and Lexi that friends and business acquaintenances have. Everyone praise the quality and reliabilty to the hilt. In fact a good part of the praise is that they don't rattle like the cars they gave up on, which are American and European. Enough said. Personal experience, CR, JD Powers, American surveys, German surveys etc etc all say the same thing. Your story is an exception, as are your friends who have Lexus problems.
  • blckislandguyblckislandguy Posts: 1,150
    OAC, my intention was just to ruminate on how much a guy would have to spend to get himself into a reasonably late model (i.e, 2002) high end car. I didn't want to get into residuals or econometrics. Just how much the initial nut would be.

    However, since you raised the subject, I disagree with your statement that "the 745i does not have a higher resale value than the LS430 .." Moreover, this statement contradicts a later statement of yours that "..actual 'buy' prices for a low miler '02 745i will be...barely a deuce higher than a comparably equipped '02 LS430." (Sorry, you can't have it both ways. Either a 7 Series '02 Bimmer does or does not cost more to buy than a Lex LS430. "Barely a deuce" is a significant amount of money. In the data I presented earlier, the spread was far more than $2000. )

    Proof: Look at my post above. I present Edmunds data for 2002 for private party transactions (the middle category they offer), the BMW is significantly more money. If you disagree, you will have to argue with the Edmunds methodology.

    Yes, everyone agrees that the 2002 7 Series has an awful reputation. Apparently (and surprisingly) it has not hurt resale.
  • ljflxljflx Posts: 4,687
    Resale value retention is usually based on percent of MSRP retained and not actual dollars. In that vain the LS is pretty far ahead of the 7-series. In actual dollars it's the 7-series. In the end your measurement is purely what you have to part with in the bank account and I see your point fully. The original buyer cares about dollars lost, the used buyer couldn't care less about the original buyers lost value. He wants to hold the car and by the time he's done they are all worth the same anyway.
  • mezecamezeca Posts: 66
    You better not go look over on the RX330 board, they are full of rattle complaints.
    Oh, and shift quality complaints, engine noise comlaints, wind noise complaints....do I need to continue?
  • merc1merc1 Posts: 6,081
    I still feel you are looking at this the 'old fashioned' way, in that companies operate by designing and building what they think a product should be for a particular segment. That's bassackwards in plainspeak.

    Companies that operate the way you suggest these days struggle to hold customers. The Euros all do this. They've got that old fashioned German scientist engineer thing down pat where they think they know what's best for the customer. Unfortunately, this kind of rocket science has got them in a lot of trouble.

    Companies that design cars that their customers buy in droves are in fact designing and building exactly what the market wants, not what they think the market needs. The measure of success is the money they make, the share they gain, the positive press they receive.

    Companies that are in trouble financially are failing to make what the market wants.


    I think you're taking my post out of context. What I mean is that every luxury car maker has their theory or idea as to what a luxury car should be, not that they should dictate what the market gets. All car companies listen to their customers in varying degress, but there are differences.

    What Lexus thinks a car should driver, look and feel like is their philosphy at work, ditto for Audi, BMW, Mercedes and every other brand here. If every brand had the same ideas we have a bunch of Lexus like cars or all BMW type cars. I didn't say that MB or anyone else dictates what type of car the customer should have, rather its that each brand has a take on the luxury car theme.

    Also, if Lexus' way was so superior they'd be the bestselling car in every class don't you think? Yet they're far from it. The ES plays a game no one else is playing, the GS and IS have always had a hard time staying popular so obviously Lexus either doesn't listen to their customers, or they aren't giving what the market wants, going by your theory. The LS has a good take on the idea of what most would consider an ideal luxury car, plus being priced below its main compeitition equals a hit.

    Why do you think MB dumped its boss this week? Because the board thinks the cars don't handle right or ride right? No, I think he failed to realize the hole he had dug and couldn't get them out of it. New management was needed before this turns into their own Little Big Horn

    I agree with you here, had nothing to do with car design. He was let go because MB has been tarnished badly under his reign, mainly because of quality problems, which isn't what I'm talking about above.

    M
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