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The Value Proposition of Luxury Brands

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  • andre1969andre1969 Posts: 21,581
    I think the 1970's screwed up the idea of luxury for a lot of people. Traditionally, in the US at least, usually the bigger, more powerful, and more plush the interior was, the more luxurious the car was considered to be.

    But when the first fuel crunch hit, the European cars were finally able to make some serious inroads. However, their concept of luxury was different from the American...small cars with interiors that were downright bleak compared to the Americans.

    And, as Americans started demanding smaller cars that were nicer, we got "luxury" editions of compacts, like the Dart S/E, Valiant Brougham, Nova "LN", Granada/Monarch, Seville, Versailles, etc. Some of these cars were downright plush inside, and, in the American context, were more "luxurious" than the more expensive European cars. Now, I wouldn't call most of these "luxury" cars, except for maybe the Seville and, to a lesser degree, the Versailles.

    I am a believer though, that there's different levels of luxury. Just like there's $250K per year rich and there's Bill Gates rich, there's BMW/Audi/Benz/Cadillac/etc luxury, and then there's Rolls Royce, Maserati, Bentley, Maybach luxury.

    And where, exactly, would something like a Ferrari or Lamborghini fall? Certainly you'd think a car that costs $100K, $200K or more would be a luxury car, but they're all about performance. Ride, comfort, amenities, and so forth, are afterthoughts. I'd look at them as more of a "trophy" or "high priced toy" than a luxury car.
  • You mean those big pimpy American cars of the late 70s? I always thought of them as "faux luxury"----as W. C. Fields said of Mae West: "She's a plumber's vision of Cleopatra".
  • ctlctl Posts: 123
    We seem to focus too much about brands (Toyota/Lexus, Hyundai/Genesis) and forgot about the most important factor of luxury and prestige - price. A 35K MBZ C, Lexus ES, BMW 328, Hyundai Genesis... are not luxury cars. A 60K Equus however, while a Hyundai, should be considered one. A Jaguar XJ at old days, while crappy and not providing a reliable overall luxury experience, IS a luxury car at 70+K.

    The real luxury are the ones that need not worry about values. Values are the way they entice you with a luxury image/brand.

    With that, what's a Equus? I really don't know.
  • Well I think the buyer of a luxury car needs to definitely perceive "value" in it, especially at those prices.

    This is probably why Jaguar will be on the ropes soon enough, and why Cadillac still has credibility issues as a Lexus competitor.

    The Escalade, however, seems to convey value + luxury even though we all know it's just a Chevy with lots more POOF in it. Somehow, the size, the bling, the connection with sports figures, etc., makes it work as a "luxury" item. Maybe it's because BIG and CHROMEY and OSTENTATIOUS is what America does best? I mean, our best selling car is a truck, right?

    I don't see how Hyundai is going to pull this off with that badge on the grille.
  • j2jj2j Posts: 147
    edited October 2010
    Putting aside the claim that Toyota sold the LS400 at a loss for a couple of years; that would mean that the LS400 was not a luxury car either since it had an MSRP of just $35K.

    Also, there is a problem of pricing btwn countries.

    For instance, the USDM Genesis is decontented from the KDM Genesis in order to keep the price down (doesn't have the adjustable air suspension and other goodies); so does that mean the KDM Genesis sedan is luxury car since it sells in the $50K+ range in Korea?
  • j2jj2j Posts: 147
    Lexus and Infiniti now have their own "tuner" sub-brands as well; Hyundai will have one as well in the not too distant future (there's a reason why they have been developing a 5.0 supercharged Tau V8).

    As for high "specs", the Toyota versions of the Lexus lineup (i.e. - Celsior instead of the LS) were higher spec'd than their American Lexus counterparts - which leads to an interesting question - which is more "luxury" - the higher spec'd Japanese Celsior or the lower spec'd LS which is sold under a luxury nameplate?
  • j2jj2j Posts: 147
    The final decision hasn't been made by Hyundai's higher-ups in Korea, but Hyundai UK is taking some preliminary steps and they are really pushing for it.

    If they indeed go ahead w/ it, I agree it would be a ballsy move (much tougher for a Genesis brand to gain traction in Europe than over here), but Hyundai and Kia have been having a lot of success in Europe lately, recently overtaking Toyota in sales.

    Plus, I don't think they are expected anywhere close to BMW, Mercedes or Audi nos.; otoh, it would be better if they wait until their compact, RWD sedan is ready.
  • j2jj2j Posts: 147
    "C is the entry level MB sedan, not E."

    ****

    Right, I got mixed up typing while thinking about the ES.
  • j2jj2j Posts: 147
    edited October 2010
    "As long as it has the Hyundai nameplate it will not register as a "luxury" vehicle in most people's minds I don't think. The term seems meaningless when applied to the Hyundai, because "luxuxy" is a relative term, and compared to *real* luxury cars, it's not going to cut it IMO.

    E.G., a pair of really nice shoes from Sears are not a $600 pair of Ferragamos and you're not going to find them being shown off in the best places.

    It's a wannabe kind of thing IMO. It doesn't fool the people who know the difference, I guess is what I'm saying.

    Now, if you want to argue that a Hyundai may stay on the road as long as a Lexus, or that the Sears shoes are better for hiking than the Ferragamos---no argument from me on that."

    *******

    Not quite the proper analogy.

    Not saying that the Equus is as good as say, the 7 Series, but one can buy $80K+ diamonds from Costco and save oneself a few thousand bucks for eschewing the baby blue box (Tiffany's).

    Or instead of paying full price for a pair of Ferragamos at Saks, one can buy it at a discount from Saks Off.

    Methinks you are mixing up what a luxury car is w/ luxury brand.

    Hyundai is not a luxury brand, but the Equus is a luxury car, just as the Toyota Century is a luxury car (on the level w/ the Maybach and not the lower S Class).

    And oh, curious that you didn't bother reading further (much less posting) about what Edmunds says about the Equus.

    "Even with this minor demerit, the 2011 Hyundai Equus is a genuine competitor to other luxury sedans, both midsize cars like the BMW 5 Series and Mercedes-Benz E-Class and flagships like the BMW 7 Series and Mercedes S-Class. The Equus is solidly engineered, remarkably quiet and indulgently comfortable, and that's on top of its exceptional feature content and relatively affordable price. While some will turn away because this car shares its badge with non-luxury automobiles, open-minded drivers (or those looking for luxury without flaunting it) will find the 2011 Hyundai Equus to be an intriguing vehicle."
  • fintailfintail Posts: 32,892
    edited October 2010
    What's the Infiniti tuner line that can compete with AMG and M? I know Lexus has the F-series, but with its bland appearance and fake exhaust tips, it hasn't won a huge following, and reguarly comes in behind the competition. I'll await that supercharged H, haven't seen anything about that.

    Does the JDM accept the Celsior as a luxury car more than a high value car? That's a good part of the answer.
  • Edmunds quote is contradictory at best, which I think reflects their own doubts:

    How can something be a luxury car without "flaunting it"? I mean, it's not the same as silk underwear----everyone is *supposed* to see it, as it lives on the street.

    The Equus is a luxury car relative to a Corolla. It isn't a luxury car relative to world-class luxury cars.

    Journalists don't get to decide what is a luxury car, nor to forums hosts. Buyers do, ultimately, along with the public's perception of the buyer and his/her decisions. "Successful" or "fool"?

    So we'll see who pays $60K for a Hyundai and if the "luxury" label really sticks, or is dismissed by public perception.

    I have no idea how it'll spin out.

    The LS400 was an instant luxury car, not in spite of its lower price, but because the Mercedes was so grossly overpriced.

    Here again, the general public didn't vote the Benz OUT of the luxury market, but voted the Lexus IN. The LS400 was an impressive debut and nobody said "$35K for a Toyota??"
  • fintailfintail Posts: 32,892
    The Century can compete with Maybach? Where? Among rabid Japanese nationalists? The Maybach is priced pretty much in Rolls territory...does the Toyota compete there too, really?

    Personally, I don't put a lot of stock in mainstream American car reviews, which pretty much are chained to ad revenue and seldom meet a car they don't like. I'll have to see other opinions, especially ones that take into account design and handling.

    Starting at 58K...I can buy a lot of still under warranty German luxobarge for that money.
  • Hyundai should have started its own luxury nameplate. The Equus is a big big mistake in my humble opinion. Maybe they have this move up their sleeve, I dunno.
  • fintailfintail Posts: 32,892
    edited October 2010
    Hyundai UK must have some nice cash reserves...I can't imagine that branding strategy working in the UK or on the continent if it was found unsuitable for NA, where as far as I can tell Hyundai has a better image and market share than in the EU. Europeans never fell for Toyota quite as hard as people in NA.

    Hyundai tried to sell the Grandeur for over 40K Euro, and I read once sales volumes of that car were in the double digits in the UK. Tough road.
  • fintailfintail Posts: 32,892
    I get a Phaeton vibe from it...cheaper, but without the design and likely driving competency. I could be wrong...but conspicuous consumption remains as big as ever during this super-recession, it'll be a tough sell.
  • hpmctorquehpmctorque Posts: 4,118
    edited October 2010
    In earlier messages we expressed numerous opinions on the relative values of models from Toyota/Lexus, specifically the high-end trim Camry V6 and Avalon versus the ES350. My conclusion, after reading the opinions of several of you, is that the value contest is largely dependent on the final price, which, in turn, is dependent on the option packages one chooses. Given that the ES350 has more standard options and features, plus a better warranty than the Camry and Avalon, if you load up the Camry or Avalon to make them equivalent to the basic or lightly optioned ES350 with no or few additional options, the ES350 wins. If the ES350 is loaded and approaches $45,000, it loses.

    The point I want to raise here is that the value comparison may be more clear cut with the brands and models of other automotive groups. I should mention that I assign a decent weighting, albeit mostly subjective, on how cars age, in terms of image. While I take little note of five, 10 and 15 year old mass market cars, I always notice the luxury models. Example: A 10 or 15 year old C or E-Class Mercedes still looks good and interesting to me (assuming it's been reasonably well maintained). I may be the exception on this, but maybe some of you feel similarly.

    With this in mind, let's compare the VW Passat and the Audi A-4. I see the A-4 as the better value for someone who keeps his car for more than 3-4 years. If you trade more frequently than that, the Passat is the better value. I guess it would take too long to elaborate on all the reasons why this is my subjective conclusion, but appearance is an important factor for me. A new Passat looks good and fresh, while an older one, not so much. The A-4 retains its visual appeal for significantly longer. It also drives better.

    Granted, there are exceptions among mass market models, such as the '57 Chevy and the '65 Mustang, but I consider those to be too old to consider in this discussion.
  • hpmctorquehpmctorque Posts: 4,118
    I would guess that Hyundai will eventually establish a luxury brand, and move their current RWD models over to that brand. The reason is that it's easier to obtain higher prices and go head-to-head with the competing luxury brands than if you market your luxury models along side your mass market models.

    I think Hyundai tested the waters with it's luxury models. As they see that they can compete, they'll establish a luxury channel. Don't know if they'll do the same with Kia.
  • I think Kia is on Death Watch in the USA. I know, most people don't agree with me, but that's what I think. In Asia of course, different story.

    Speaking of Asia, it's possible that Hyundai is taking note of what some economists insist is "the future"---that the entire weight of global wealth, production and capacity will shift East in the next 25 years. In other words, the Twilight of the West---not disaster or ruin certainly not, but a shift to a new world out there somewhere.

    I can see this in terms of car production, as the USA and Europe are very "mature" markets---to sell a car here, you have to steal the sale from another automaker. Nobody in the USA or Europe "needs" another car.

    So with the rising upper middle class in Asia, and the declining upper middle class in America, maybe testing a luxury brand here in the USA for future marketing in Asia isn't such a bad idea.

    It's better than developing a car for Asia and trying to sell it here--that has never worked really well. It would be easier to possibly de-content a luxury car for Asia, than spiff up an Asian car for the USA.
  • corvettecorvette United StatesPosts: 4,001
    I had a current generation Escalade as a rental the last time I went out west. I felt like a complete tool driving it, and it was missing some features (like keyless ignition) that I thought would be standard on a luxury vehicle. Also, one of the gas struts popped off of the tailgate glass when I opened it. It drove quietly and unobjectionably enough, but at that price level, I don't think that's sufficient.
  • corvettecorvette United StatesPosts: 4,001
    The Passat has a nice interior and good driving characteristics. I see that VW is currently selling only one model of the Passat this year, with (I think) navigation as the only available option.

    The A4's interior is over-the-top for a mid-$30k vehicle. It used to be slightly smaller than the Passat (which itself was slightly smaller than other midsize sedans), but I'm not sure if this is still the case. I loved the A4 that I leased, and might lease one again if there were a similar killer lease deal, but I wouldn't want to own one (or a Passat) out of warranty.
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