High End Luxury Cars

nvbanker · October 2005

A Kia? I think not. What an oversimplification!

merc1 · October 2005

But I'll tell you what - when I see an ordinary person driving home in a new S500 to a house that is worth 50% of mine I know he's just BSing himself on status. Besides, after three years his car is worth less - on top of that. So much for status three years later.

Wow what a judgement based on nothing more than a grand assumption! What it that person isn't into houses like you are? What if they like cars more than houses? What is an "ordinary" person? That is clearly a snob remark if there ever was one. Why is that a Mercedes/BMW buyers buy for status, yet Lexus owners are these meek, non status seeking people, yet they drive the most wannabe-status, "I'm a luxury brand to" luxury car on the planet? Lexus owners think status and prestige is bs or for German car buyers until you mention Acura or Infiniti, then you'll get a complete about face and a lecture on how Lexus has so much more status and prestige over a mere "Honda" and a Infiniti. Gawd that is hilarious.

M

merc1 · October 2005

Does it occur to you all these unreliable marques, except Ferrari, are actually dead? (Is Ferrari owned by Fiat now? Correct me.) They were forced to bankrupt and sold to other companies. Eventually, the new parent companies are going dump these money drain once again.

Actually no because they aren't. Lamborghini just wrapped up a great year in 2004 and is on track to have their best year ever for 2005. Hardly dead. Mercedes-Benz is far from being dead, and according to some of today's press they're showing signs of corporate stability. Ferrari has been owned by Fiat for years? Whats your point? Ferrari is the most legendary name going in the sports car world, more so than even Porsche in a lot of circles. They owned F1 racing until just this year. Of course that means nothing here because luxury car bordem is the order of the day. You only need to read anything about Bentley today to know what a bang up job they're doing. The only ones on that list that aren't doing so hot are Maybach and Rolls-Royce, but dead they are not. They made the mistake of overestimating the demand for 300K+ cars.

M

merc1 · October 2005

I think to say these companies are successful simply because of their better reliabiltiy ignores the rest of the picture. The reasons for each vary greatly, with the main one being they finally have a corporate parent with the resources to finally exploit their various talents while making the business case work. These brand's reliability isn't even tracked and people who buy these cars don't give two hoots about Consumer Reports or JDP - even if they did cover Ferrari, Bentley, Maybach, Lamborghini etc.

Bentley is alive because of VW's donating the Phaeton's platform for not one, not two, but three different Bentleys....all at prices nearly 90K less than only Bentley model left over from the old regime - the Arnage. That is why Bentley's sales have exploded, not because of their stellar reliability, especially using VW "stuff".

Lamborghini's situation is very similar. When you only sell a 300K Murcielago you aren't going to set the sales charts afire, but cut that price in half by offering a V10 engineered (i.e. money from Audi) sports car and all of sudden the brand is alive in a big way.

Finally, yes Honda did prove that a supercar can be reliable, but they haven't been able to capitalize on it. The NSX was surpassed and rendered irrelevant about 10 years ago.

M

lexusguy · October 2005

When I sat in a '05 XJ VP, and felt the inside of the door handle, it was hard, cheap plastic. I tapped a finger nail on it, and it had the signature Kia 3 cent plastic sound. On the one surface of the car that you're going to be touching constantly. I really cant think of a dumber place to cost cut than the door handle. The other major problem I have is with the seats. They're just plain 'ole leather seats, absolutely nothing special about them. They could easily have come from a Lincoln. They seem passable enough...just dont sit in an XJ12, or you'll see and feel whats been lost. This is what Jaguar seats are supposed to look like:

merc1 · October 2005

If the new 2007 XK is up to snuff will it be a possible canidate?

M

lexusguy · October 2005

Absolutely. I'm hard on Jaguar because I love em. The new XK should definitely remain the best looking car in its class, especially the drop top, which I think looks better than the coupe. While Callum is correct in that the XKE coupe was a hatchback, nobody wants XKE coupes.

merc1 · October 2005

Absolutely. I'm hard on Jaguar because I love em.

I understand totally.

M

garyh1 · October 2005

KBB, ALG and the Blue Book:

What further stats do you fellows need to understand that BMW is number one in residual values?

Well, let's start with the fact that "KBB" and "Blue Book" are the same - what do you think the BB stands for?

But I'll try one more time. Let's start with the assumption that the car you drive - a 3 series - is a great car; most would even say the best in its class. It probably has excellent residuals, and in terms of units sold, could certainly put BMW's "average" residuals way up there.

But if you are buying a car in the group covered on this forum, the 3's residual is irrelevant. The only BMW model that is relevant here is the 7 series.

So even though it should be blatantly obvious to everyone that historical data shows the LS' residuals are better than the 7's, let's do this one more time based on Edmunds data, which is supposedly based on ALG data on projected residuals (see the 2/12/04 press release on ALG's web site that announces it is providing info to Edmunds).

Edmunds.com has a section called Total Cost of Ownership (TCO). They do exactly what we all agree is the correct way to determine residual value (although they do it using ALG's 5 year projected depreciation, rather than historical data). They use current TMV (True Market Value) for purchase price, and the projected private party sales price for disposition price, with the difference being depreciation.

So using the Edmunds/ALG TCO data, a 745 can be bought for $77,409 and is projected to depreciate $44,257 over 5 years, therefore retaining 42.8% of original cost. An LS can be bought for $61,698 and is projected to depreciate $34,501 over the next 5 years, for a 44.1% retained residual.

I think I have now shown conclusively that both on historical and projected data, the LS has better residuals than the 745. But some folks here won't accept it anyway.

There certainly may be reasons to prefer the 745 over the LS, but residual value is not one of them.

Oh, by the way, TCO for the 745 is $1.11 per mile vs. $.96 for the LS. And for those who are interested, it's $1.15 for the MB S430, $1.22 for the 4matic version. The Audi A8 and Phaeton both run $1.12; the Jag XJ8L is $1.01.

If nothing else, we should all be able to agree that the LS is the value leader in this class, both up front and long term.

gshocksv · October 2005

What I meant was, if it wasn't for these corporate parents and the injection of capital, Ferrari, Lamborghini, Bentley, Rolls, would probably be plagued with reliability problems and have already gone bankrupt.

Let's use Rolls Royce for example, they had the prestige, the luxury, the engine, but why weren't they selling anything? Reliability.

Now Lamborghini- They had the prestige, the horsepower, the style, why did they almost go bankrupt? Problem with reliability (the lack of racing sure didn't help either).

Even Ferrari- in the early 90's, it was bleeding money when everyone knew Ferrari was the ultimate exotic car, why? Reliability.

Rolls and Lambo got new parents, the first thing they did was to improve their realiblity. Ferrari spent tons of money to improve its reliability in the early 90's because they knew their survival depended on it.

Of course you can argue the economic downturn in the 90's, the lack of racing success in both Ferrari and Lamborghini... etc, but if you pull some articles from the era about these exotic cars, most auto editors complained about reliability issues. So yeah.... I believe reliability is pretty important.

BTW- Edmunds has a very interesting article on their long term Ferrari 550, I highly recommend it.

merc1 · October 2005

What I meant was, if it wasn't for these corporate parents and the injection of capital, Ferrari, Lamborghini, Bentley, Rolls, would probably be plagued with reliability problems and have already gone bankrupt.

Well that is basically what I stated in my previous post, except for that reliability part. I don't see here is how their reliablity has made any difference when they never traded on reliability in the first place. Secondly, the usual Consumer Reports and J.D. Powers data isn't available for brands like Ferrari, Bentley, Lamborghini, Rolls-Royce and Maybach. Everything I've ever seen about these cars and their buyers indicates that this group has a Mercedes, BMW,Lexus,Jaguar i.e. a "regular" car for everyday use.

Reliability as it is known here is not the reason why some of these of these brands have come back. Lets look at each one of them.

Rolls-Royce - they aren't doing to good, but they are doing better than when they were owned by Vickers. True, if it weren't for BMW they would likely be out of business in today's marketplace. It wouldn't be because of reliability in surveys, it would have been because of a obsolete product. The old Silver Seraph didn't even have HID headlamps or stability control when it was introduced in 1998. The cars Rolls built under Vickers were techincally obsolete and your average Mercedes, BMW, Lexus was a vastly superior car from that standpoint. Fast forward to 2004 and now with BMW at the helm they're able to produce a product that is both technically advanced and built much better than any Rolls in several generations - yes this does include reliability, but I seriously doubt that a Phantom has the reliability of a Toyota or Honda. The car itself is vastly superior to the Silver Seraph - and that is what brought Rolls-Royce back, not because survey chasers are checking results - their aren't any because RR isn't part of any surveys - that I know of. Its product. Now their comeback is iffy because while they are "up there" in name and what not, they severly overestimated the market for 300K cars like the Phantom. The last Silver Seraph wasn't nearly as expensive.

Bentley - their comeback is due solely to lowering the price of admission to the Bentley lifestyle from 225K+ for an Arnage to 165K for a Continental GT. This is via VW's Phaeton platform. All of a sudden I see Bentleys (Continental GTs) all the time and all the years before that you hardly every saw a Bentley Mulsanne, Turbo R or Eight. Now they're selling the 165k (or so) Continental Flying Spur and next spring they will sell a convertible version of the Continental GT Coupe, all on the VW platform. VW is hardly the standard in reliaiblity and I will never believe (without proof) that all of sudden Bentley's reliability is so good to the point where people want to buy them now. Its the price cut that got the traffic into Bentley showrooms, not reliability. Bentley still sells the Arnage, the car from the Vickers era and it has been tweaked so many times now I've lost count, and it still sells, but at over 200K it isn't going to sell as much as the Continental group of cars. Price far outweighs reliability when it comes to Bentley's roaring comback. There is a reason why the Mercedes CL has dropped like a hot rock since last year, much more so than the S-Class has. It is called the Continental GT. For a little more than a CL55 or CL600 you can have a Bentley. The CL65 AMG actually costs more than the Bentley.

The same is for Lamborghini. Every since the Jalpa was dropped in the late eighties Lamborghini was a one car show, and a 250-300K car at that, the Diablo and then the Murcielago. Enter the new under 200K V10 Gallardo and sales shoot up in just one year - that isn't reliability because Lamborghini has been owned by Audi since 1998, but the sales only came after the much cheaper Gallardo was brought to market in 2003. If you read a roadtest of a Lamborghini you'll see that they still aren't reliable. In the latest C&D comparo the Gallardo was flatbedded away, and didn't finish the test. Numerous test of the Murcielago have shown how fragile their gearshifts are - editors have broken them many times. Sure Audi made sure they don't run hot anymore and that the a/c actually works, but they did that with the Murcielago and Diablo (towards the end of its run), but the big sales (relatively) didn't come until the much cheaper Gallardo came on the scene.

The overwhelming factor behind the newfound success at Lamborghini and Bentley is a lower price of admission, made possible by their owner VW, not because they're more reliabile. Lambo is barely any better than they used to be in some aspects of reliability.

Now I agree about Ferrari having learned and gained the most because they aren't as fragile as before. Ferrari always had expensive cars and more than one model to sell and they haven't gotten any cheaper to buy so reliability has played a much bigger role there - I agree there.

A Maybach could be as reliable as a Camry, isn't going to change the fact that most people don't know the history behind Maybach or that is costs an absurd 325K to start. Now if they decided to build a cheaper car that will help, but that won't make any sense if they're going to be in S-Class territory, but that is another debate.

Rolls-Royce has the rich-parent to inject capital into them, but they still don't sell as well as BMW would like them to. Now watch what happens if and when they bring to market a car priced along the lines of the 225K Bentley Arnage, which you'll remember was the sister car to the old Silver Seraph. That being a market segment they abandoned with the over 300K Phantom. It has very little to do with reliability as we know it here.

M

lexusguy · October 2005

Those original Maybach Zeppelins were gorgeous cars, but I agree, today the name means about as much as Pierce Arrow, or Cord. It's unfortunate that the last things the original company made were engines for Panzer and Tiger tanks.

killerbunny · October 2005

I am an American who was actually up there trying to buy a car....and it was not even 5 years ago. It also has nothing to do with your economy...It has to do with taraffs and import fees which are much lower up there....In essence you are a free trade zone with Japan and Europe..

These five years, the Canadian Dollar has risen from 0.63 USD to 0.84 USD (33% increase). The price at the dealers are not lowered. In short, the car company/dealers do not list prices according to what costs them, but what can be afforded.

killerbunny · October 2005

Actually no because they aren't. Lamborghini just wrapped up a great year in 2004 and is on track to have their best year ever for 2005. Hardly dead. Mercedes-Benz is far from being dead, and according to some of today's press they're showing signs of corporate stability. Ferrari has been owned by Fiat for years? Whats your point? Ferrari is the most legendary name going in the sports car world, more so than even Porsche in a lot of circles. They owned F1 racing until just this year. Of course that means nothing here because luxury car bordem is the order of the day. You only need to read anything about Bentley today to know what a bang up job they're doing. The only ones on that list that aren't doing so hot are Maybach and Rolls-Royce, but dead they are not. They made the mistake of overestimating the demand for 300K+ cars.

LOL, you justify your point by 1 year of great sales? My bad on using the wrong words. Actually, these marques were dead long ago. Only some CEOs were fanatic about these cars and thus bought them at the expense of the employees. Example: this year, 2005, Bugatti Veyron is finally rolled out with many titles like being the fastest and the most expensive. This same year, VW lays off more than 20,000 workers in Germany.

Same goes with all English marques (Aston Martin, Bentley ....). They are English no more and they do not make money for their new masters. One year of profit does not a good business make. Check out the profits of these marques for the past 30 years plz! A lot of Ferrari's income was from tobacco ad's on their race cars. Let's see what happens when those ad's phase out in the next several years.

In the United States, the most profitable marques (in terms of profit per car/suv) are Porsche at No.1 and Lexus at No.2. Is it a surprise? BTW, the most profitable company overall is Toyota, whose market value is No.1 in the world and more than double of GM and whose profit is more than the big 3 combined (if they do have a profit).

dewey · October 2005

Merc1,

Great post!

Absurdly high prices will kill the success of any car whether it is catered to the affluent or not!

designman · October 2005

I always try to get my kids to eat brocholli. I remind them its good for them, but they go eeewwwww !!!!

Oac, a BMW is good for you. C'mon now, just take a couple of forkfuls and you can go watch TV.

;-)

syswei · October 2005

imho the higher up you move in price, the less important reliability becomes, and the more important exclusivity/prestige becomes to the people that actually buy these things. Not just in cars but sometimes in other products like watches. It is well known for example that Rolex is unreliable, but that doesn't keep some people from buying them, mostly imho for show.

syswei · October 2005

I heard a speech yesterday by an expert on demographics. He said that people in Japan actually don't drive that much because the country is so densely populated...something like 80% of the population on 2% of the land, due to mountainous terrain. If you put every car in Japan on the roads simultaneously, there would be only 4 feet between each car. In the U.S. it would be 140 feet.

ctsang · October 2005

"It is well known for example that Rolex is unreliable."

Where did you get this info? You are so wrong that it is not funny at all. It also shows that you don't know anything about watches. My Rolex lasts longer than you and I several lifetimes over.

designman · October 2005

My favorites are Breguet and Patek Philippe. Are they reliable?

BTW, heres a David Ogilvy story.

Ogilvy & Mather once had the Rolls Royce advertising account. While developing strategies and tactics, one of O&Ms researchers went to England and was given tours and demos of the product by RR execs. He was awed by the quietness of the cabin and noticed that he could hear the clock ticking. Upon hear this Ogilvy said, bingo, thats an ad. The headline of one of their ads proceeded to read something like this

At 60 mph in a Rolls Royce, the only thing you can hear is the clock ticking.

Upon seeing the ad, the chief engineer at RR was a little upset and said we really have to do something about that clock.

;-)

syswei · October 2005

Well, first of all, someone I used to work with had a relative that owned a high end watch store, so that it where I first heard it, I think the words were something like "Rolex is a poor timepiece".

Second, I have read that cheap quartz mechanisms will keep more accurate time than certain expensive Swiss-made models.

Third, if you just do a google with the words "rolex reliability" you'll turn up annecdotes like:

Went shopping for a jacket when I noticed a colorful watch on a man's wrist. I walked by him and noticed it was the red/blue Rolex GMT-Master. So I asked him about it. He told me he bought it on his way to Vietnam over 30 years for a "mere" $700. I said "Then you must have been an officer". He chuckled and confirmed. He flew in a gun-ship and operated the infa-red.
The watch itself was pretty beat-up. Scratches, and crystal cracked, but it still looked awesome. He said it was a "poor" time-keeper and required adjustments often, and service costs are high.

- or -

I have purchased this good looking but highly unreliable watch last fall.For the price all I had was a good looking bracelet, the accuracy of this watch was something left to be desired, frequent repairs, and in my books a total rip-off. I now own a Audemars Piguet and absolutely love it.

Of course, some owners might prove a little touchy on the subject.

For the record, I own an unreliable Swiss-made watch. Philippe Charriol. I bought it because I really liked the looks, and it wasn't too expensive.

gshocksv · October 2005

I think we can go back and forth on this, I do agree with many of your points, but ultimately, I think reliability is the number 1 issue that these brands had to work on, and it's not just simply sorting out all the bugs, but changing people's perception of its reliability. Poor reliability means poor resale value. Let's admit it, a lot of these rich people can afford to buy these luxury cars, but they still hate to lose 50% of the value after a few years. Also, in reality, a lot of people in the nation's top 3% income bracket can afford the lower end of these premium brands, but they just can't afford to run them.

I could go on and break down my analysis, but it's starting to sound like a college research paper to me... so probably not. I do want to say, most auto magazines I read in the 90's identified reliability as the number 1 problem with these super premium brands.

BTW- here's the link to Edmund's long term test on its Ferrari, very interesting. Do you think the editors will be buying another Ferrari soon?

http://www.edmunds.com/insideline/do/Drives/LongTerm/articleId=49771

brightness04 · October 2005

I don't see here is how their reliablity has made any difference when they never traded on reliability in the first place

Well, "never" is a long way to look back. Most prestige brands made their names trading on reliability in the first place, including the grandaddy of them all, Rolls-Royce. At a certain point in a marque's history (for cars or for watches), the groupies take over, and the products get purchased for their "exclusivity," which of course makes for a conundrum for the manufacturer, as you so aptly pointed out regarding how the new Rolls are not doing so hot due to high pricing. When "exclusivity" becomes the selling point, it makes the product line highly cyclical. A few more years of good sales volume for Bentley, do you think it will still be perceived as "exclusive"? probably not. Selling on "exclusivity" is not a sustainable marketing position; that's why practically all the brands selling on that point are owned by one mass merchandizer or another.

dewey · October 2005

My Rolex lasts longer than you and I several lifetimes over.

Sounds like my wife's 83 MercedesBenz 300D! This heirloom will continue being a part of our family as long as it does not malfunction! (I thought of using TNT but wont since this car has nostaligic value)

brightness04 · October 2005

Sounds like a Lexus commercial nowadays, doesn't it? No idea why Europhiles think quiet-as-a-tomb is a sin.

brightness04 · October 2005

Keeps running (like any other mechanical watches that use diamonds at friction points; industrial diamonds are not expensive at all; my no-name self-winding mechanical watch has a dozen of them), but not necessarily good time keepers.

brightness04 · October 2005

A small point of correction:

Also, in reality, a lot of people in the nation's top 3% income bracket can afford the lower end of these premium brands, but they just can't afford to run them.

According to income tax data, the cut-off point for top 1% household/filing-unit is only $350k, and the cut-off point for top 5% is only $140k. I'm well between these brackets, probably close to your postulated 3% mark . . . yet as much as I love cars, I can only afford to keep 2-3 cars each at $30-40k, a small fraction of the $170-350k aking price of those top-end prestige cars. Just goes to show how rarefied the field of buyers of the cars under discussion really are. . . how vulnerable the manufacturers are to any cyclicity. Just an injection of reality into this discussion. Personally, IMHO, Rolls and Maybach are out of their collective minds asking $350k for a car (and Lexus will eat their lunch in a couple decades ;-)

brightness04 · October 2005

A lot of Ferrari's income was from tobacco ad's on their race cars. Let's see what happens when those ad's phase out in the next several years.

Very good point. Ferrari actually makes more money from souvenir sales than car sales . . . in other words, it has transformed from a car company to a "marquee company." ;-)

lexusguy · October 2005

I have a Rolex President, that I bought used in 1988. You dont buy one of these for "accuracy for the dollar". You can get a watch that syncs with the atomic clock for $50 at sears. Accuracy and reliability are not the same thing though. My President is 25 years old, and I have little doubt that it will last another 25 no sweat. In today's disposable culture, there is nothing else like it.

lovemyclk · October 2005

I'm afraid your Rolex comment is meritless. I purchased my Submariner in 1986 and it has been as solid as a bank vault, with only Rolex-recommended cleaning performed to date. As a mechanical watch, no batteries need to be replaced. This watch will run for generations and still looks and feels new...

As for the "show" comment, not all Rolexes are solid gold Presidentials. Bunch of Execs I worked with welcommed me to their SSR club, not open to any gold Rolex wearers... SSR=Stainless Steel Rolex

pat · October 2005

gshocksv · October 2005

Of course I don't remember the exact number, but I think top 3% is around $250,000/year. I think depends on how you look at it, a lot of these people can afford "the lower end" of these premium brands if they're willing to. however, like I said, just because you can afford to buy them doesn't mean you can afford to run them, when you factor in insurance, maintenance, depreciation (big one!) that's probably why you don't see too many of these cars. I am in the top 9% myself (just me individually.... and yes I know, doesn't mean much in this particular forum) according to the tax data if I remember correctly, a lot of people probably think I could afford to finance $45,000 on a car loan when the payment is about 8% of my gross, but because of my tolerance level, I feel that's way too much. I am very comfortable with my current debt to income ratio of 3.6% on my car loan.

However, I also have friends that are perfectly comfortable with a 20% DTI car loan. If you put down $60,000, finance $110,000 on a Gallardo, that's about $2,000/months for 60 months. That's about 10% of your gross if you make $250,000/year. I think 10% is probably ok with a lot of people, but if maintiancen/cost of operation is another $1,500/month, that's going to make a lot of difference.

gshocksv · October 2005

lexusguy,

I think you should check out the new XJ8L, the interior is vastly improved, alumnium structure makes it much more faster and more fuel efficient than its competitors.

I remember the first time I stepped into a new XJ8L, I was totally amazed by its luxury, I think that ultimately influenced my decision to purchase a Jag S-Type.

syswei · October 2005

OK, I cry "uncle". Rolexes are at least capable of dependably telling inaccurate time. And at only 100x the price of a atomic-clock-resetting Timex, payback on owning a durable Rolex as compared to buying a new Timex every 3 years, is only 300 years (well, maybe add a few decades for the Rolex-recommended cleanings)...I'm not sure how that's consistent with the notion that few Rolex owners bought their watch for show, but there must be some explanation.

Anyway, back to cars...

syswei · October 2005

Toyota officials let slip in Tokyo that the LF-A is going to have a V10 engine, developed from the engines in Toyota's F1 cars, which is thought to develop over 500bhp and give 200mph-plus capability. Although the engine is front- rather than mid-mounted, the LF-A will be rear-wheel drive, and Lexus has promised "the ultimate weight balance", "extravagant comfort" and "precision operation."

source http://www.channel4.com/4car/gallery/spyshots-2005/L/lexus/lfa-spider.html

oac · October 2005

Thanks, Pat. Didn't Dewey accuse Lexus owners as stuck-ups ? Please note the Rolex owners as Jag, MB, Lexus, etc. owners....

Back to the HELM discourse, while the Ferrari's, Lambo's, RR's are not purchased bcos they are the most reliable, it sure does not hurt if they are. Some of these owners probably have it chauffered anyway. So if it breaks down, they have people who will take care of it without them even having to lift a finger beyond writing the check.

BTW, there are more Maybach's on limo linesin posh hotels than on driveways. What a disaster from MB.... And how much better to point to failure than to re-design your high-end S-class in the mold of the failed Maybach experiment. What were they thinking ?????

oac · October 2005

Sorry, syswei, but these are old news.... C&D or another auto rag had carried the LF-A specs many months ago....

The real unknown is what Lexus has up their sleeves for the next LS ? Now that would be some info leak to really look forward to....

dewey · October 2005

Thanks, Pat. Didn't Dewey accuse Lexus owners as stuck-ups ?

Huhhh :confuse:

syswei · October 2005

got this email, announcing a launch party and special lease rates at the same time:

Subject: For a limited time, special lease rates on the R350

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Contact your authorized Mercedes-Benz dealer today for more information on this exclusive event and the limited-time special lease offers on the R350. Don't miss the opportunity to experience the R-Class for yourself.

I guess it ain't flying off the lots.

oac · October 2005

What it that person isn't into houses like you are? What if they like cars more than houses? What is an "ordinary" person? That is clearly a snob remark if there ever was one. Why is that a Mercedes/BMW buyers buy for status, yet Lexus owners are these meek, non status seeking people, yet they drive the most wannabe-status, "I'm a luxury brand to" luxury car on the planet?

I am sure Len can defend himself against any assertions, but let me point out that if there has been a consistent thread in the Lexus camp, its that we believe, backed with verifiable factoids, that Lexus is the most reliable full-size luxury sedan in its class.

As to marque or brand... it is MB fanatics that always uses this to trump Lexus, claiming that MB's prestige and marque justifies its lofty price, and the breadth of MBs offerings especially in the higher end where Lexus doesn't even compete, makes MB the marque brand. So now, we get Merc1 accusing Lexus owners of being snobbish... what an idea !!! What would you consider all these talk about MB being a higher brand, higher status than Lexus ? What is that if not snobbish?

Excuse my cheekiness....

dewey · October 2005

that Lexus is the most reliable full-size luxury sedan in its class

Most "reliable" is as significant as being most"fuel efficient" or having the most "cargo space" in a full size luxury sedan. These three things do not define luxury or performance in any car since you can receive all three in one inexpensive non-luxury non performance vehicle called a Toyota Matrix which is renowned for its reliability, fuel efficiency, and cargo space!

Again, when did I commit such a notorious crime as calling "Lexus owners stuck up"? I remain innocent until proven guilty!

ljflx · October 2005

OAC - not wasting my time on that one. He totally missed the point.

brightness04 · October 2005

10% pre-tax income every month on one car payment is not okay at all; it borders on the insane when one is in a high tax bracket, if you ask me. I barely spend 10% of my pre-tax income on housing, and much of that is tax-deductible, unlike interest on cars. Don't forget, out of the $20k or so pre-tax income every month, the taxmen at federal and state level take out about $9k! After all the life's necessities and retirement contributions, I'm lucky to have $3-4k a month to play with (assuming credit card bills do not eat that up first). There is no bloody way I'd spend half that on a single piece of depreciating asset and another half of the remaining half to keep it running (I agree with you on the high cost of operating such a beasty). Most of my friends that make comparable amount of money (ie. the working upper middle class) also drive cars in the $30-40k range (G35, FX, GS, etc.), although a sub-$100k LS, S or 7 series can probably be arranged if one is inclined to drive a full-sized car (and have a second car at much lower price point or kept for a longer time). Only the 7-digiters (or at least half mil a year, or a doubling from where we are) can really afford the brand new ultra lux in the $170-350k range (I'm sure they may also have their own financial limitations even at that higher level of equilibrium). BTW, that also explains why most riders of ultra lux vehicles are old farts (if only I can be so luck when I'm old ;-)

oac · October 2005

These three things do not define luxury or performance in any car since you can receive all three in one inexpensive non-luxury non performance vehicle called a Toyota Matrix which is renowned for its reliability, fuel efficiency, and cargo space!

A Matrix is renowned for its reliability, fuel efficiency, and cargo space ? Maybe cargo space... You may not know it, but I do own a Matrix... and an LS. The Matrix is 2003, 42K miles and I can already hear squeaks and rattles, just a lil'.... The LS is '99 with 109K miles, and coffin quiet interior..

Again, when did I commit such a notorious crime as calling "Lexus owners stuck up"? I remain innocent until proven guilty!

As of this post... immodest = snob, in my books...But if you didn't mean it that way, I'd understand...

dewey, "High End Luxury Marques" #10842, 25 Oct 2005 10:12 am

dewey · October 2005

You may not know it, but I do own a Matrix... and an LS. The Matrix is 2003, 42K miles and I can already hear squeaks and rattles, just a lil'...

So I guess your experience with your one Matrix disproves that whole myth about Toyota reliability? Thanks for the clarification!

immodest = snob

Unlike the Japanese who bought an LS from Toyota dealerships these past 15 years, North Americans instead buy a LS from a luxury dealership called Lexus. Buying any car from a luxury dealership is not an act of modesty nor is it being "stuck up"!

ljflx · October 2005

Most people that can afford these cars are $250K and higher in base salary plus bonuses, long-term bonues, stock options etc. In most cases they have enough money saved that a portion of the innterest income covers the car payments if they are leased or auto loans if they are not. Many of the leased cars carry their own tax deductions against self-income.

ljflx · October 2005

The expensive Toyota cars are kept in a separate showroom - usually a separate floor from the mainstay cars in Japan. So they may not be sold separately in name but they are sold separately in class and mode of operation.

Syswei - MB is dealing right now. I got e-mails on the E500 wagon (15% off) as well but nothing on the R-class. The R-class does not seem to be a hit as yet and that doesn't bode well for seeing an HPX.

gshocksv · October 2005

Again, that depends on how you look at it. You might not feel comfortable at 10%, which I totally agree, but there are a lot of people that are perfectly fine with the 10% or the 20% limit. I personally don't to spend 10% of my total income on a car payment because it's out of my comfort zone, but again, that's just my view, and happens to be yours. BTW- this also validates my point on the total expense. The payment itself might be 10%, but the total cost is more like 20% when you factor the cost of operation, hence you really have to be making a lot more, and is what I've been trying to say.

I am in the mortgage backed security business, buy loans in bulk and securitize them to sell them in the secondary market. People often stretch up to 45, 50% on their housing to income ratio, and lenders are fine with that ratio now days. You might not feel comfortable with that ratio, but a lot of people are fine, it's just the difference in how you perceive risk.

Simple economy logic.

brightness04 · October 2005

That's precisely the point that I was making. The target audience for the ultra lux cars is actually much smaller than top 3%. IMHO, more like the top 1% (whose cut-off line is still only $350k) if not top 0.5%, which is nearly an order of magnitude reduction from top 3%.

Regarding tax deduction on car lease and financing, actually IRS codes make it rather difficult to deduct lease payment in full for cars over about $35k even if it is used entirely for business purpose. That partially explains the popularity of cars just below that mark.

brightness04 · October 2005

Okay, here's the deal: 10% of pre-tax income for someone who makes $25k is not much more than 10% of his/her after-tax income because he/she pays next to zilch income tax, and chances are that the payroll tax portion etc. was never in the equation. 10% of pre-tax income for someone who makes $250k is actually nearly 20% of his/her take-home pay, thanks to the progressive tax system. 45,50% of pre-tax income on housing might be workable for a few years for a waitress who has large (percentage-wise) unreported cash income and have little tax liability on reported income due to low tax bracket and employer paying half of social security tax etc.; the numbers would be unworkable for someone whose tax bite is 40% or more of pre-tax income. You can probably find unwary 45,50% suckers buying $200k condo or starter homes on their way to their first bankruptcy, but the loan payments for million-dollar-plus homes seldomly take up 45,50% of pre-tax income of the borrower, unless the guy works for the mob (in which case he'd be paying with cash anyway).

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