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Comments
C'mon.... You claim that the Matrix is renowned for its reliability, blah blah blah... Then I tell you that the Matrix which began life in the spring of 2002, 3+ yrs ago is not a car to be called renowned in anything, maybe cargo space.... Then you turn it around like my Matrix experience is already a myth about Toyota reliability ? C'mon man....
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"!
First you claim "innocent until proven guilty", and then you try to rub it in that buying a luxury car is itself an act of snobbery ! Wonder why you drive a BMW and not a Kia ? Or why your wife drives an MB and not a Hyundai ? Were these family cars purchased because of their snob appeals ?
I'm off this wagon cos its leading nowhere....
On the super-jumbo you mentioned, a lot of lenders will still lend up to 45% DTI ratio on multi-million dollar loans, of course the LTV has to be low and you'll need compensating factors, but it's definitely not rare, a lot of these super-jumbos have ratios around 40-45%... and of course, these burrowers tend to have the so called "Option ARM" loans, in which they can choose a negative amortizing payment, of course I won't get into details about it in this forum.
I would agree with you that you have to be in the top 1%, or making about $500,000 a year to comfortable own a say, Gallardo, but that's because I factor in the maintenance. The same applies to someone who makes $50,000, but can somehow manage to stretch and buy a BMW 330. If you make $250,000 a year, you can stretch and buy a Gallardo, but the Gallardo is actually a whole lot more expensive due to maintenance, depreciation, and service costs, hence my conclusion, if you make $250,000, you can afford to buy it, you just can't afford to run it. While the 330, although expensive, is not too costly to maintain and upkeep, so you see more people making less than $50,000 but drive a $40,000 car.
Lastly, here's why I think you have to make $500,000 a year, to comfortablely afford and run a Lambo Gallardo. Your take home pay a month is about $23,000, you pay $6,800 in principal, interest, tax and insurance on your $1.35mm home. You spend about $3,500 a month for everything else, another $900/month on your Mercedes, another $800 on your Lexus. It's wise to have an investment property/second home, in which you have a $300,000 mortgage on, and the net cost after your rental income is $1,000/month. Your Lambo's monthly payment is $2,000, and another $1,000 to $1,500 depending on how much you drive, that still leaves you with $7,000, and if your CPA is a crook, you'll have about $10,000 left.
Of course, everyone has their own view. My co-workers in between the income level of $500,000 to $1,000,000 don't own any of these exotics.
Oh, and I want to add, the DTI (debt to income) ratio, actually doesn't have much to do with whether someone will be able to make his/her payment on time. Back in the 80's, DTI was the number 1 info that an underwriter check, and anything over 38% is an automatic decline.
Now days, lenders weight a lot more on LTV, credit score, and assets. I've seen DTI in the range of 57%... and we still bought the loan... it's called risk based pricing. Contrary to popular belief, lenders do not want to foreclose on your home, the cost of a foreclosure is substantial for a lender. Go check with your local real estate broker and you'll know....
A bit off topic, interesting to know that borrowers of over a mil tend to go for "Option ARM"; are you talking about developers/flippers or actual buyers who intend on living there for the long haul? I see nearly two dozen million+ housese empty within a few blocks of where I live; waiting to pick them up on the courthouse steps someday . . . wife wants a house upgrade, and that's the only way I can afford one of those beasties.
it's called risk based pricing.
"Junk bond" is just an unflattering vernacular term for high-yield bonds. Historically, the yield differential between residential mortgage-backed security and commercial loans had been tremendous, a rich ground for arbitrarge indeed as people start to buy houses to turn a profit instead to live in.
Yeah, my point being they aren't dead. They're on the comeback after years and years of neglect and fumbling. I agree about VW, but now the Piech isn't running the show they'll forget about this luxury car nonsense. That Bugatto project has to be the most awesome, but pointless and ill-timed car ever made! Engineering to death, but at what cost. Meanwhile we get base Jettas with a crap engine. Yes its all true.
As far as what makes a sounds business I'm not arguing about because Ferrari and Aston, hell just about every European carmaker has teetered on death a few times so they aren't business leaders in that respect. I'm not sure what you mean by Aston-Martin is no longer British. They are as British as British can be. They're built and engineered in a brand new facility in England, only their engines are built in Germany. Yes their V12 did start out as a 2 Ford V6s, but I dare you to find one common part and I double dare you to tell me you hear any Ford in a Aston V12 upon start up, full throttle or idle. The Ford DNA has long been engineered away.
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).
Who cares? Sorry I can't get excited about this, its very, very, very old news and no one here was comparing any of the ultra-luxury brands to any of Toyota or Porsche. Totally irrelevant. You stated that Bentley, Ferrari, Aston-Martin, Rolls, Maybach etc were did and they aren't - thats all I'm debating here so please spare us the Toyota speech. Its silly to compare such tiny brands to Toyota on a profit basis anyway.
M
The only problem is that there isn't any mass tracking of reliability for brands such as Ferrari or Bentley. Secondly all of these cars take huge hits in resale, except the rare Ferrari here and there. Resale values and reliability are not part of the reason why people buy Astons, Bentleys and the like. These cars are toys for the rich and aren't subject to all this reliability talk. They might hate to lose 50% of the value in 3 years, but its been happening since the beginning of time and yet when a new Aston, Bentley, Ferrari etc. appears it sells out. Ferrari in particular sells every one of the 4000 cas they build every year. Every single one of them.
Regarding Ferrari I'll go with the reliability theory, but with Bentley, Aston and Lambo its price, price and price. They all have taken off nearly a 100K off the price of admission to the brand. The Gallardo is roughly half the price of the Murcielago. That is the source of their comeback because editors still report Lamborghinis breaking down during roadtests. Magazines were only stating what they found to be the problem with these brands, not what the customers found - big difference.
M
You're right Bentley won't be as exclusive in a few more years because like I noted earlier I never saw many Bentleys until the Continental GT came out, now they're everywhere! They won't be able to maintain the momentum forever and at some point down they road they'll slow down, unless they go cheaper - something the current Bentley chief is against. They're even talking about making a Bentley SUV to keep things going at the current pace, a mistake imo. Personally, the only "Bentley" to me is the Arnage and upcoming Azure.
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.
I agree. This is why all of them belong to a much bigger entity. I'm just thankful that VW, Ford, and BMW value these brands enough to let them thrive.
Now how does GM fix Saab?
M
The difference that you're not seeing here is that the Mercedes S-Class is a known product, unlike Maybach. The S-Class will have a certain amount of buyers no matter what it looks like. Secondly the Maybach is overpriced in addition to being an unknown. They remain totally different cars and more importantly they're in different market segments. Maybach (and Rolls) developed these mega dollar monsters during a time in which the sky was the limit. Remember the Maybach concept first appeared at the Tokyo autoshow back in 1997. A lot has changed since then and they both overestimated the market for 300K cars. Rolls will always be Rolls, whatever that may mean to its buyers, but Maybach is a virtual unknown which is a huge problem for them.
M
This because Lexus fanatics constantly say that prestige doesn't matter until somone mentions Acura or Infiniti. You know like in your defense of the IS350 on the other boards. Lexus can charge more because of this and that. Does that ring a bell? I didn't say Lenn was a snob, I said that was a snobbish remark and that there was far too many assumptions going on with that remark. I can't help it that Lexus fans judge everything by sedan standards and try to ignore other cars that MB and BMW make.....that are part of the mistique also.
What would you consider all these talk about MB being a higher brand, higher status than Lexus ? What is that if not snobbish?
I'd call it a fact, or pointing out the obvious. Nothing different than what Lexus defenders do when talking about Lexus in relation to Acura and Infiniti. Lexus having more prestige than Acura or Infiniti is a fact isn't it? Yep.
M
It appears you read my post but did not understand the following:
Buying a luxury car is not an "act of modesty" nor an act of "being stuck up"!
Matrix which began life in the spring of 2002, 3+ yrs ago is not a car to be called renowned in anything, maybe cargo space.... Then you turn it around like my Matrix experience is already a myth about Toyota reliability ?
Accoriding to the passages of the "Lexus Bible" called the Consumers Report--the Toyota Matrix is as reliable as any Lexus! You know that same book that you use to bash German brands!
I was not amazed by its luxury, most likely because I've driven XJ12s, and remember what true Jag luxury used to be.
Just like any other purchased brands, like Jaguar, Bentley, etc. the buyer gradually milks it dry, it may even turn a profit once in a while, like the zombie that rises every 10/31. Economic cycles are such that every decade or so, even the most atrociously run car company and most outrageously priced cars have worse economic excess/inefficiency to exploit. In case you are wondering, I bought mine during the fire sale after 9-11, for the price of a Saturn L series plus a song, it was a good deal, especially considering the additional safety features. Over the past few years, the rest of the industry caught up on the deep discounting, so it's no longer a relative value proposition, IMHO.
http://www.vipmotorcars.com/images/2003_Jaguar_XJ8_35k/26.JPG
This is the new XJ8. Other than little chrome strips around the door handle and window switches, pretty much nothing was done.
http://p1.autorevo.com/377/pics/13921_84dcabe0-fbbf-4753-9b3a-20a76db0b606.jpg
Just as financially strapped GM sold its share of Subaru ownership to Toyota there are rumors that GM may consider a sale of Saab. The most likely buyer is Nissan/Renault!
Saab with only 126K worldwide sales is known to be the most popular vehicle among academics and journalists. Is such a narrow niche worth exploiting?? I guess such a niche is worth exploiting with platform sharing and I do know there are large number of potential platforms from Nissan and Renault that can be share with Saab .
IMO it certainly beats the idea of Cadillac/Saab or GMC Truck/Saab platform sharing!
The reliability of vehicles from Nissan Motor Co. took a tumble in a new Consumer Reports annual survey, with four out of the five vehicles produced at the Japanese auto maker's newest Canton, Miss., plant making the dubious list of vehicles with worst predicted reliability....
The survey also didn't bode well for European auto makers, which didn't have any vehicles among the most reliable, or domestic auto makers, which only had two in the top 31 vehicles in the influential survey. Of the worst 48 vehicles: 22 were domestic and 20 from Europe....
Several DaimlerChrysler vehicles showed declining reliability in the magazine's annual reliability survey....
Of the top 31 most reliable vehicles, 15 were from Toyota and Lexus and eight were from Honda. The most reliable 2005 model? The Toyota Prius hybrid car, with only 4% of drivers having to take the vehicle into the dealership for service. The Infiniti QX56, that line's biggest SUV, was at the bottom of the list, with 40% of owners having to take it in for repair. Toyota also did well with older models. Its Toyota Tacoma was the most reliable 1998 model-year vehicle (as well as 1999 and 2000 model years), with fewer than one in four customers needing to take it in for repair during the previous year. Volkswagen AG's Passat sedan, with a 1.8-liter turbo engine, was the worst performer for the 1998 model year: Some 72% of owners had to visit a mechanic for repairs....
David Champion, who heads the auto test center for Consumer Reports, said the domestic auto makers generally are making strides in improving short-term quality issues. But as vehicles age, domestics start to have more problems than Toyota and Honda. "They're closing the gap in the newer years," Mr. Champion said. "The long-term durability is not as good."
The most common question he gets, he says, is for a safe-car recommendation. Though it varies by size and class, he says, the Toyota Corolla with optional side airbags and electronic-stability control is his most-affordable pick.
http://www.consumerreports.org/content/Categories/CarsTrucks/Reports/Images/0504rel007.gif- - -
Without the details we cannot make any judgements. Just guestimates which are as good as useless!
http://online.wsj.com/article/SB113037039010080619-search.html?
A culprit, not the culprit. Check this (don't know if the link will work for non-subscribers):
http://www.consumerreports.org/main/content/display_report.jsp?FOLDER%3C%3Efolder_id=40262- 1&ASSORTMENT%3C%3East_id=333137&bmUID=1130425500021
Alternatively, "Asian" cars includes Mitsubishi, Nissan, Hyundai, and Kia, which hurt their overall performance.
Nissan Quest, Armada and Titan
Infiniti QX56
What does the chart mean? All I see are nice color seqeunces with a red line scrawled across it!
The best way to address this is by looking at the chart from CR that Lexusguy posted a few days ago:
http://www.consumerreports.org/content/Categories/CarsTrucks/Reports/Images/0504rel201.gif- - -
Notice among other things how the least reliable Lexus is actually more reliable than the most reliable Audi, BMW, or MB. Also notice that MB's median model is less reliable than VW's.
So, MB is dragging down the Europeans more than VW is!
That being said, reliability isn't everything, even to a Lexus owner.
MB does have its strengths ( I do like the MB CDI), but they certainly do have reliability issues that needs resolving!
Thanks for the description of the graph!
lexusguy, "High End Luxury Marques" #10769, 23 Oct 2005 11:49 am
I like the CDI too; it is unfortunate for MB that the US press is so fixated on hybrid now...detracting from some of the attention that should be given to modern diesel.
Yeah... I sure would love to be in that bracket. I am pretty sure I would buy a used Lamborghini Diablo if I were making $500,000/year, I won't drive much, and since it's used, payment should be lower.... I can still dream!
On the off topic:
Most of these super jumbos are actually owner occupied, because in reality, it doesn't make sense to spend $2mm on a property and rent it out, depending on how much you borrow, your rent would have to be $11,000 just to cover basic costs, and if you can afford to fork out $11,000 a month on rent, you would be crazy not to buy.
Also, lenders are very careful with flippers, if we were to buy a $2mm loan, we want to see at least a 1 year prepay on it, if not 3 years. If the loan is $2mm, we'll probably pay $2,030,000 to $2,060,000 for the loan ,and that does not include the cost to securitize the loan and sell, the commission for my boss, for me , the salary for our auditors, funders, and underwriters. If the borrower flips, we'll be in the red pretty fast. Of course, it still happens (sometimes quite a bit), but we're usually pretty careful with flippers.
A lot of these high end Option ARM borrowers know how to manage their money well, they usually have their own business and they would rather have a negative amortizing loan than having a commercial line of credit in the 8-9% range. I think this is a good program if you know how to manage your money. If not, 30yr fixed is the conservative way.
I think that the superluxes like a Gallardo are bought by people who pay cash. Entrepeneurs, not salaried people, no matter how high the salary, or Wall Street types with a low base salary and a 7 digit bonus every year.
I could be wrong though because I do think that there is a high turnover in these vehicles which suggests that some of the buyers are leasing them and might quickly tire of the payments.
We do buy a lot of loans from $3mm to $10mm. As a matter of fact, even if you could pay cash, a lot of these ultra riches would rather get a loan. We've bought a $6mm loan, the borrower was a prince from the Middle East, I am sure he could've paid cash, but he's not. And really, it makes sense. Just like I mentioned, a lot of these ultra riches have their own businesses, the current prime is almost 7%, with a 2% margin and you're looking at a 9% commercial line of credit. It makes more sense to have a real estate loan around 6%.
I don't think Gallardos are mainly bought by people that pay cash, because it's relatively affordable compares to most exotic models. I am sure people who buy the Veryon or the Enzo pay cash, but Gallardos, Continental GTs, are still affordable to people that are not on the Forbes 500. Of course, I am not in the car business, I don't know if this is really the case. I do know one person who makes a bit less than $2mm/year, who almost bought a Gallardo (ended up with a Flying Spur), would've financed it.... in between his loans, he would like to have cash in the bank.
It may not seem like a big deal over here, but Germany's BMW group expects to sell more vehicles than the Mercedes car group this year. If BMW comes out on top, it will be the first time in a decade.
You can expect to hear some chest-beating from BMW execs in Munich. But there's no telling how long the Bavarian automaker can keep the crown if Dieter Zetsche recharges Mercedes.
And then there's Lexus.
BMW and Mercedes execs underestimated what Lexus could do in the United States, but they're not likely to make that mistake again in Europe or anywhere else.
Even so, it won't be long before it's a three-way race.
M
Yeah it does. GM should be ashamed of themselves for doing that to Saab. Every other car company around that owns a little European brand has done a much better job than GM has with Saab. I haven't seem anything so ridiculous in my life. Who did they think they were going to fool with such a lame reskin? What is truly sad is that some people don't know the difference.
M
Edit: 7 for the MT, and 8 for the automatic. Hardly what I'd call impressive for a turbo charged engine with 250hp and 258ft.lbs of torque.. also barely any faster than the old turbo four.
I agree about the performance, hence maying saying it was interesting with a "but" at the end.
I think you have to want a Saab and/or appreciate them for their unique character because they've never, even been outright winners in any category at any time.
M
Yeah... but the shared platform it uses is not good enough to be competitive in this class. If GM wants the 9-3 to be able to really compete, it has to get the Sigma bits that underpin the CTS. Anything less, and its an also ran.
In any case it is clear that the MB brand generates strong emotions in a way that Lexus does not. I don't think that many people see someone as a parvenue in new Lexus but they might if, say ,your hitherto Ford Explorer driving insurance guy delivered your new policy in an E Class.
Whaddya think?
If anything, I think MB suffers the most because it has gone from one extreme to the other more than any other luxury brand. MB was the car that was always described as "bulletproof", "solid", "sturdy", "long lasting", etc.; much more so than BMW or Audi. Now which car is at the bottom of the relative reliability list - yep, MB. BMW sold on drivability and still does; Audi originally sold on value and later on "sexiness", and now at least still has sexiness (and perhaps still better value than MB). MB was always a compromise (perhaps better called a "perfect balance") on all the other traits, but reliability was its bailiwick.
Hey, quite a few of us that bought a Lexus recently have gone on record here as really having wanted to be able to get an MB, and looking forward to being able to do so in the future when MB gets its reliability act together again. Of course, now some of us are also less than thrilled with the styling of the upcoming S.
It's not antipathy you're observing, it's frustration!
Lastly - where is the stability of the brands styling? We went from an in your face bulk look with the S to a svelte styling that was revolutionary and did everything in its power to hide the bulk and now we are back to in your face bulk. Merc1 says he reads that the bulk is hidden in the 2007 S but everything I read says the opposite and the rear of the car looks pregnant to my eyes. So I see a simple thing here - a brand searching for its reliability roots in an electronics era where the country of origin has weaknesses (this is Japan's forte) plus a brand that is searching for how its marquee car should look. It's incredible to me that the S looks stale before it's even released. The evolution of the car should almost be changed so that the 2007 is the 2001 and the 2001 is the 2007. Then at least I'd know what styling direction they're going in.
- Reliability. I would have considered a 2006 R-class but aside from some design issues I am very disappointed that MB said its overall quality issues had been fixed for 2005, yet it still trails BMW by a sizable margin according to JDP IQS...not to mention Lexus. Is is so funny that MB management initially put out a goal of being number 1 in reliability but then only months later backed down, saying "American tastes are different" so it can't finish better in American surveys. Gee, somehow other German brands like BMW and Porsche can do better than MB on American reliability surveys; so its a rather lame excuse. God only knows how their long-term reliability will look now that management thinks it has its quality problems "fixed" (except for those pesky American tastes).
- Status. Since MB is the highest-status mainstream brand, I think the average MB-buyer is more of a status-seeker than the average Lexus-buyer. I guess I don't care for people who seek status above all else...and imho there are more such people driving around in MBs than in any other mainstream brand.
- To some extent I just like debate for the sake of debate. It is "fun" to have an "opponent" so to speak.
;-)