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The Value Proposition of Luxury Brands

hpmctorquehpmctorque Posts: 4,120
edited March 7 in Lexus
People generally buy luxury cars because they like them and can afford them. But can they be justified from a value perspective, when you can buy an equally functional car for a lot less? The answer can be no, or yes.

How do we arrive at a "yes"? Let's take a simple comparison between a Toyota Camry and a Lexus ES 350. Both cars are on the same platform, but the ES 350 costs roughly 33%-50% more than the Camry. One justification for choosing the Lexus is that it ages better than the Toyota. What I mean is that a three, five, or 10 year old Lexus looks better (interior and exterior) than a Toyota the same age. When you drive up to someone's house or a restaurant, people who care at all about cars will focus more on the brand than the model year, and this, in many cases, will be reflected in the way you feel about yourself. If you drive up in a five year old Lexus, you look relatively successful. By contrast, no one even notices a five year old Camry. It doesn't draw attention to itself. It isn't the object of pity, but neither does it draw admiration that the owner has achieved some modicum of success.

The difference remains as the cars age. Compare a five year old Volkswagen with a 10 year old Mercedes or BMW, or a Chevy versus a Cadillac, and the older cars still manage to win more admiration.

Okay, I generalized, and there's lots of room for debate on this topic. I've told you the way I see it. You may say, "I just want safe transportation and the lowest cost-per-mile." Or, "I prefer to be annonomous, and don't want to be judged by the car I drive. Besides, the car doesn't make the person." Or, it's smarter to buy a new Accord than, say, a 1 or 2-year-old Acura." Fine. That's why there are so many choices on the market.

Have you debated between buying a luxury model and a more modest one? What factors did you consider, and what did you buy?

Do you feel similarly about the clothes you wear as the car you drive? Some do, and others don't.

What are your thoughts? Are luxury models worth the extra money to you?


  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,305
    We usually drive the 95 T Bird to church, but one recent Sunday, we drove our 94 Town Car. We were surprised to observe other parishioners "noticing" the TC. One lady asked, " When did you get that? It's beautiful." :confuse:
  • fintailfintail Posts: 32,923
    An properly cared for old luxury car seems to age better than a normal car, and that old TC is likely a lot more appealing than a new cheapo car if it is pristine and in the right colors.

    The 1989 S-class I once owned got looks and compliments all the time, and the unwashed think my 8 year old E55 is new.
  • berriberri Posts: 4,007
    I think a luxury car is primarily a personal preference or an image thing. Certainly nothing wrong with that, and they are nice to drive and there is an intrinsic value to that. However, strictly financially, even if the depreciation rate is lower, the greater up front cash and the accordingly larger amounts of cash value lost through depreciation generally argue against it being the best purely financial proposition. I'm sure there are exceptions as there can also be for some popularly priced vehicles, but I think value and luxury tend not to be synonyms.
  • fintailfintail Posts: 32,923
    Not to mention higher costs for servicing and consumables...although some makes are doing away with that (Jag comes to mind)

    Lux is really only a good value when it is used...and then, you have to be very careful.
  • hpmctorquehpmctorque Posts: 4,120
    If you view a car strictly as transportation, then I agree completely. The fact that higher trim models of mass market cars generally outsell the very basic ones suggests that most people consider more than just the transportation value when buying a car. Since people tend to keep their cars longer now than in the past, it's likely that how the car ages is frequently factored into the buying decision.
  • To my point of view, if the "luxury" car does not excel in performance and styling, then it's a waste of money---too MUCH money for just poofier seats and some wood trim and a few gadgets and 2 inches more leg room. That doesn't justify an extra $20K or so.

    In the "old days", when you went from a Chevrolet to a Cadillac, you KNEW it the moment you got behind the wheel. Now, I'm not so sure you notice much between a Toyota Avalon and a big Lexus.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,305
    not so sure you notice much between a Toyota Avalon and a big Lexus

    In the "old days" there wasn't much difference either between the LaSalle & Cadillac.

    The Avalon is the LaSalle of Toyota.
  • True but the LaSalle failed as a brand---that should tell us something about having too narrow a dividing line in "tiers" of luxury.

    If I'm spending $75K on a car, I want it to a)dominate on the road and b) make the parking valet's eyes pop out. That's why a Porsche is worth the money to me, and a Lexus SC430 is not.
  • lemkolemko Posts: 15,071
    Heck, in the 1960s you could clearly see the difference between a Pontiac and a Chevrolet. Some of those mid-60s Poncho interiors are very nice!
  • andre1969andre1969 Posts: 21,594
    True but the LaSalle failed as a brand---that should tell us something about having too narrow a dividing line in "tiers" of luxury.

    Well, the LaSalle Avalon does give Toyota a nice, large-ish car to sell, where otherwise they might have had to dilute a Lexus model. Isn't that pretty much what the LaSalle was there for? To give Cadillac dealers a cheaper, bigger-volume car to sell, without diluting the Cadillac name?
  • Yeah but nobody knew what to make of the car, especially with all the other GM brands hovering around it a bit too closely. Picture an Avalon, and $200 below it a Bakelon, and $200 below that a get the idea.
  • andre1969andre1969 Posts: 21,594
    Oh yeah, I think the LaSalle had definitely run its course. IIRC, in later years, its price crept up closer to the real Cadillacs, until it was finally replaced by the "proper" Cadillac Series 61?

    In later years, I guess the Series 62 and later Calais sort of filled the LaSalle's role, although eventually Cadillac figured they didn't need it at all, and dropped it. Eventually, most of the manufacturers just figured that they could cover the same market with one model and 3-4 trim levels, rather than 3-4 different models. For example, at one time Chevy had Biscayne/Bel Air/Impala/Caprice, but by 1986 or so it had been consolidated to Caprice, Caprice Classic, Caprice Classic Brougham, and Caprice Classic Brougham LS.
  • hpmctorquehpmctorque Posts: 4,120
    edited October 2010
    Since I haven't driven an Avalon in years, and have never driven nor even ridden in the large Lexus sedan, you happened to cite two models where I agree that paying more isn't worth it. This is true even though the Avalon is a FWD V6 and the big Lexus sedan is a RWD V8. Because the large Lexus, like the Avalon, emphasizes comfort over sport to an extreme. I doubt whether the RWD architecture of the big Lexus really matters much in the driving experience. So, you're right; someone looking for a large, comfortable sedan can't do better than the Avalon from a value standpoint. Although some might choose the Buick LaCrosse over the Avalon, that doesn't disprove your point.

    Now, if you compare a loaded Camry V6 versus a Lexus ES350, one could argue that the ES350 is a better value proposition. Although they share the same platform and drivetrain, I think the ES350 is worth the extra money, since for not too much more it looks more upscale than the Camry, has a significantly better warranty, and it ages better. However, I completely agree that the differences have narrowed enormously from your Chevrolet versus Cadillac comparison. Back in the day, GM made sure that the look and feel, and the driving experience, were completely different.

    I realize that I'm talking out of both sides of my mouth, but I conclude that whether luxury models are a better value than plainer, more affordable ones today depends on which models you compare.
  • Hmmm....$10K more for an ES 350 over a loaded Camry? I dunno....yeah, maybe, but I think in this case you're paying mostly for the prestige of the Lexus name. I mean, a Camry, in terms of public perception (real or imagined) is sort of "rental car" level, even with the premium pak and the V-6. And you're right, Lexus styling is better. I do see your point.

    However, if you loaded up the ES 350 and pushed it over $40K, this unflattering comparison might fall apart. A $15 to $17K diff between a loaded Camry and an ES 350---well, $17K is a big chunk of change!
  • hpmctorquehpmctorque Posts: 4,120
    We're now on the same page, Shifty. There isn't much latitude in this comparison, and option packages can easily be the factor that tips the scale one way or the other.
  • hpmctorquehpmctorque Posts: 4,120
    So, what do other readers think is the wiser choice, near-luxury or high end mass market?
  • lemkolemko Posts: 15,071
    The 1963 Buick Riviera was meant to be something of a LaSalle revival. Notice the twin grilles on each side of the central eggcrate grille mimick the tall LaSalle grille of fine horizontal bars. Early mockups of the Riviera actually carry a LaSalle II designation.

    Back in the early 1930s, Buick and Oldsmobile had lesser-priced companion makes called Marquette and Viking. Pontiac was a lesser-priced companion make to Oakland that eventually superseded it.
  • berriberri Posts: 4,007
    I think the lines between mid priced models began getting all hosed up in the 60's. Cars like Chrysler Newport or Buick LeSabre began chasing Chevy buyers while the Caprice or Ford LTD started going after lower level mid priced buyers. I always liked a mid level car line, but today the low and mid level is covered by one car line like Camry LE vs. Camry XLE. I don't think it will go back.
  • hpmctorquehpmctorque Posts: 4,120
    edited October 2010
    In terms of Toyota models, wouldn't you say that the mid level is also covered by models such as the Avalon and Lexus ES350? One could argue that the latter two are the spiritual successors to the Chevrolet Caprice, Ford LTD, and Plymouth Fury III, and that the ES350 is the modern equivalent of the Olds 88, Buick LeSabre, Mercury Montclair, Dodge Monaco and Chrysler Newport.
  • I'll go you one further. I personally find it hard to categorize *any* car under the $50K mark as a "luxury brand". There really is a difference between a $40K and a $90K automobile.
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