High End Luxury Cars

tagman · May 2006

I should have used "more successful" instead of "success" because you and I know Lexus is very successful already.

Yes, you COULD have, but you didn't. A pattern of sorts.

Steve - Just curious . . . In a hypothetical scenario, let's say that Lexus could build the LS for $20K LESS . . . what do YOU think the smartest move would be on the price?

TagMan

blkhemi · May 2006

I test drove an ES350 the other day, and all I can say is the car is a much-improved driver and has better fit-n-finish and gadgets than the one it replaces. It doesn't have the bones of the IS/GS, but it is more entertaining to drive than the previous unit.

But there is one thing that surely stood out to me about the car. This particular model carried an MSRP of $48k(almost completely loaded), way out of the norm for an ES(previously anyway).

So this brings me to my point. With all of this talk about the LS pricing, with the fully loaded ES commanding 50 thou, the LS may be priced in the A8/7/XJ8 neighborhood after all. And this time, it may not take an Ultra to do so. What do you fellas think?

ljflx · May 2006

LS "likely" prices as told to me by a Lexus rep at the NY show:

Base LS460 - with nav and ML - $65K, but can be outfitted to $70-71K with pre-collision and other items.

LS460L - $68K - $74K - base ($68K) to most popular configuration ($74K) but can be outfitted to about $80K

LS600HL - $82K base - to $102K fully optioned with most configurations in the mid-high $80's.

ljflx · May 2006

"If prices on LS 460 make a quantum leap, customers wont mind"

Now the moment you make that comment to any businessman on earth that is in charge of any competitive or monopolistic product on earth, you'll be taken as a joke and the security men will be called in to take you away. Do you really believe what you wrote?

One last point - you've achieved an incredible miracle here - one I would have said was impossible a month or two ago. You've actually unified lux German car fans and lux Japanese car fans into one camp in opposition to you.

hpowders · May 2006

on LS 460 make a quantum leap, customers won't mind."

The only customers who won't mind would be those lucky folks who bought the LS 460 at $65k, BEFORE the "quantum leap!"

tagman · May 2006

One last point - you've achieved an incredible miracle here - one I would have said was impossible a month or two ago. You've actually unified lux German car fans and lux Japanese car fans into one camp in opposition to you.

AMEN.

TagMan

merc1 · May 2006

A prodigious achievement isn’t it!

M

hpowders · May 2006

Alright already, you win!
You are in luck but I must hear from you by 5PM today!
My supervisor gave me the go-ahead, Mr Steve-a proposition for rather, how shall I say, "unique" HELM posters on Edmunds.
I am prepared to offer you the Quantum Leap Status Special:
A brand new Lexus LS 460 with Bose Sound and GPS Irrigation in cloud nine white:
All for the absolutely unbelievable price of $20k over list!
You can scour the country and never find such an offer.
Instant status my friend!
I am grinding the Blue Mountain beans as we speak.

stevekilburn · May 2006

I think we agree on the build cost advantage, but thats not the issue here. Premium head-to-head pricing in line with A8/750 will benefit them and give them cachet as a "global" brand.

We are talking global here tagman. GLOBAL.

stevekilburn · May 2006

United we stand, divided we fall. Well done Ljflx, you star will shine forever.

Any astute businessman will tell you that when your product makes a quantum leap in content, you should not hesitate to make a quantum leap in charging top dollar and price head-to-head with competition for that, especially if its equal or better than the competitor.

Will toyota shareholders reject extra profits and protest against Lexus charging top dollar for a top product?

"Lexus, even though your product is unmatched, second to none, is at the top of its game, please dont charge top dollar head-to-head with competition since your build cost is low",

LOL! Such lollipop shareholders will be immediately escorted out by security gorillas.

garyh1 · May 2006

The funny thing is that if you stopped writing like a looney and made your points more cogently, you might find people agreeing with you instead of lampooning you.

We all know (and it has been discussed on this forum for years) that Lexus priced itself as a bargain back when it started selling the LS, and has been slowly but inexorably raising its prices as its acceptance in the US marketplace has increased. According to ljflx's posts about information he received at the NY Auto Show, that pricing increase trend is continuing with the new LS. But Lexus is not about to jeopardize their 17 year success story by taking a "quantum leap" in pricing.

Of course, if you posted a belief that Lexus was going to slowly keep raising prices, that wouldn't make you the center of all this attention, would it?

hpowders · May 2006

I guess I don't get how the LS 460 is supposed be a "quantum leap in content" over the LS 430.
It may be a better vehicle than the LS 430 but nobody knows that yet.
One poster said he thought the driver's seat was better in the LS 430. But even if the general consensus is that the newer vehicle is better overall, will it be a "quantum leap" better? I highly doubt it.
$65k or so sounds about right to me on pricing. Very fair for a newly designed LS with ML and navigation.
I know I will be checking one out in the Fall, assuming I can survive the beastly Florida summer!

lexusguy · May 2006

Every car company has to produce at least one lemon every now and then. Still, the statistics don't lie. 2-5% of CR subscribers reported problems with their '98 LS400s in all areas, while the A8, 7, and S have 10%+ problem rates in some areas for the newest rated model year. Thats a lot of people that have cars with no problems, but its still a lot more reported problems than an 8 year old Lexus.

blkhemi · May 2006

So it's safe to say that the LS will fall inline with the A8/7 anyway. With prices like this, and if they hold true, them Steve will get his wish.

blkhemi · May 2006

I could hardly believe CR any longer than a New York minute. Still, I know that the LS is the paramount of reliability in it's class, that goes without question. But it's far from fault-free. It is less faulty than others appear to be tho. I was just driving the point home that even Lexus has problems too. Not many, but they are there.

Heck, depending on how good the new LS is, they may get my business once again. I'm waiting for a final analysis as to whether to go with the S63 or LS as a possible replacement for my W-12 until the '09 model comes.

Yes, I had problems with my second Lexus, and swore right from that point to never return. But then again I said I'd never buy Cadillac after my '84 Eldo caught fire, but there I was again buying a '97 STS(very reliable, shockingly for a Caddy), so time will tell.

anthonyp · May 2006

In the real world, after the initial rush, I believe Lexus will still have a substantual price advantage over the bmw and a8...That is why it has been so successful---an appealing value, although there is no value in a depreciating asset...Mercedes is the one to beat, but when a company is perceived in a mystical way, it can`t be beaten until it is no longer mystical....How could they not realize that the demand for their new radar and night camera would not be in high demand from customers with much money??? Tony

stevekilburn · May 2006

So you want to call me a looney who lacks cogent thinking and gets lampooned left and right. Alright, carry on, but then dont expect me to save you next time when you make a less than perfect comment.

You think I am doing this just to "GRAB ATTENTION". Well I dont get it! I have been saying all along that it does not behove Lexus to under-cut competitors prices, when their products are second to none. What is so lunatic in that?

According to my Analysis, BMW makes "quantum leaps" in pricing when they introduce next generation of vehicles. And during model years they go for incremental increases.

Lexus has been charging mid 50K prices since 1995, and its time to move on. The quality and content gap has been sharply decreasing b/w LS and competitors, but price gap is rather increasing. I plotted all te price data since 1992 so I know.

During 1999-2001 period LS sold quite well and they reduced price advantage compared to 7-series from 25% to 16%, but then something happened and the gap increased to 25% again!!!

merc1 · May 2006

A few questions about CR. Do they only survey their subscribers or do they survey owners regardless of whether or not they are CR subscribers? I'm thinking that with all the negative reports about Mercedes why would anyone who subscribes to CR even buy one, wouldn't their survey pool dry up if Mercedes so bad?

I glanced at the April issue a while back and it looked like the only Mercedes even approaching decent reliability is 2005+ SLK??

M

merc1 · May 2006

I caught your post on the S-Class board, so you're looking to replace your belove A8 W12 already?? Why so soon if I my ask?

The S63 AMG won't have the naturally aspirated version of the new AMG 6.2L V8, but a turbo version with around 570hp.

If they went with the n/a version the S63 would actually be slower than the previous S55 AMG. The 6.2L V8 only has a few more hp (493 vs. 515), but a lot less torque than the old 5.5L SC V8 at 465lb vs 516lb-ft. The turbo version of the new 6.2L V8 will have about 620lb-ft of torque. One of BMW execs called the S63 a "firebreather" when asked as to whether or not they would build an M7.

I'm looking for a debut at either Detroit 2007 or possibly even Paris in Sept, either way it will land here this time next year.

M

tagman · May 2006

According to my Analysis, BMW makes "quantum leaps" in pricing when they introduce next generation of vehicles. And during model years they go for incremental increases.

Your analysis? Oh sure.

Historically, a "next generation" vehicle is introduced after the current life cycle or model cycle is complete. Sometimes there is a mid cycle change or facelift or slight modifications, updates, and incremental improvements and refinements.

As a new generation vehicle is released, the opportunity arises for the new price to increase, decrease or stay the same. This can be a very deliberate and strategic decision in some circumstances.

In any event, there are historical circumstances when the life cycle of a model and all of its incremental price increases resulted in a final price that is just too darned high for the replacement. In these cases the next generation car therefore becomes the perfect time to introduce the "new and improved" model at a "new lower price".

By "resetting", that is reducing, the price at this opportunity, the price can then incrementally increase once again year after year. Without this occasional "reset", prices would never come back in line as they should, and they could ultimately escalate wildly without limitations.

I am not suggesting that Lexus should reduce their prices, but I am suggesting that you recognize that price reductions and/or constraints generally INCREASE market share.

Theoretically, the GLOBAL (as you put it) automobile market is in a position to afford MORE cars at MODERATE prices than at HIGH prices. From a business standpoint, it makes sense to INCREASE sales. So, as the global demographics indicate, the volume of automobile sales will generally and proportionally INCREASE with a DECREASE in price structure. This is just a general and basic rule of global economics.

Therefore, to take your argument about quantum price change a little further, it is logical to extrapolate that the best incentive for increased sales is to offer a quantum price REDUCTION! This will then increase the sales volume even further.

That being said, it could be argued that it makes MORE sense to campaign for a quantum price REDUCTION of the LS. Just think how many more they would sell!!! :P

TagMan

merc1 · May 2006

That issue has come down to this.

M

tagman · May 2006

tagman · May 2006

I'm sure you've seen this before, but I couldn't figure out how to directly post the photo, so I've placed the link.

http://www.worldcarfans.com/spyphotos.cfm/spyphotoID/6060407.003/pageview/photo/- photo/Mini1/page/1/country/gcf/porsche/first-porsche-panamera-spy-photos

Cookie Monster says, "Me love cookies".

TagMan says, "Me love Panamera".

garyh1 · May 2006

So you want to call me a looney who lacks cogent thinking and gets lampooned left and right.

I really didn't say either of those first two things; all I said was that you were "writing like a looney" and if you made your arguments more cogently, other people might agree with you more.

Here are a couple of lines from your post that I was reacting to:

Well done Ljflx, you star will shine forever.

Such lollipop shareholders will be immediately escorted out by security gorillas.

Please read my post again and I think you will see that I was trying to support you, not insult you.

garyh1 · May 2006

Very nice! But what is the back seat like? Those rear doors look pretty small. Maybe it will make the back of the CLS look roomy?

tagman · May 2006

Maybe it will make the back of the CLS look roomy?

So does a Mini Cooper. CLS rear room is pitiful, IMO.

Final Panamera is still years away. Reasonable room would be OK. Cramped, and I would pass.

gary - forget the argument with steve . . . merc's link says it best.

TagMan

lexusguy · May 2006

CR only surveys subscribers of the mag or website. There is no data for either the '05 S-class or BMW 7, so perhaps CR subscribers did stop buying them.

tagman · May 2006

CR only surveys subscribers of the mag or website.

That's correct. And FORMER subscribers. I cancelled a trial subscription long ago and still get included in their surveys.

TagMan

blkhemi · May 2006

Yes it is true. I have a potential buyer for the W-12 waiting for me to decide on a new ride. The only reasons for selling the car is to get a decent return on my "investment" and the poor guy totaled his Phaeton and absolutely loves the W-12 powertrain, and an A8 W-12 factory-ordered is hard to come by, any W-12 for that matter.

Thanks for the info on the S63. I was reading the wrong info. It's the ML63 that'll get "only" 503hp. But 570 is better. I drove the S600 all day today, and it has erased some of my gripes with the W221.

merc1 · May 2006

I guess I'm just surprised you'd sell the A8 so soon, you seem to be a huge fan of the car.

Well it gets even more complex as the new S65 arrives in July for you to take into consideration...what a "problem" you have...lol!

M

blkhemi · May 2006

Huge "problem". I was faced with a similar "pandemic" when I acquired the S65 early last year. Turns out, the guy who was supposed to buy it bought a 760i Dinan Edition instead. This was the only S65 that was in the area and the S600 that I was eyeballing, the owner of the MB dealership wasn't ready to part with it(MB factory order that he wanted 185k for, yeah right) so the S65 it was.

Hopefully, I'll be faced with something similar to expedite my buying time.

BTW, don't feel bad for me for long as you know we're anticipating the arrival of our S8 from Ingolstadt this October. So I will still be with my favorite G-Brand.

merc1 · May 2006

Oooh...and S8...lucky you! Awesome car, arguably Audi's best car along with the RS4.

M

oac · May 2006

Blkhemi:

I read your profile. Very nice write-up, btw. Those 19 cars in your stable, if you don't mind me asking: how do you keep them garaged ? Do you have a huge football-field sized garage, or are these parked at some remote secured location ? Very curious... I have 3 cars, with a 3-car garage, but have so much *stuff* in my garage I can only fit one car in my garage. And why do you NOT have an LS4xx in that line-up ?

stevekilburn · May 2006

Your strategy speaks like a mass-market mentality. The argument is good for toyota but not Lexus and especially not LS.

The name of the game in HELM is rarity, refinement, unattainability. The image of UNATTAINABILITY becomes stronger when the price of entry becomes higher. Its counter-intuitive and hard to assimilate and understand.

Increasing the price will increase desirability for a top of the line cutting edge product like LS. In fact I suspect that some toyota guys are influencing the Lexus division too much and bringing their mass-market mentality which is not good for LS.

blkhemi · May 2006

"....19 cars....how do you keep them garaged?"

You're not the only person to ask this question on this thread. When I bought my property, there was an old barn that was about 8500 square ft. that I restored and made a 2-story garage out of.

As to the LS, I had a '98 and I had a terrible experience with the car and the dealer(2) customer service. But I know my case is really isolated as my late father-in-law had an '02 Ultra that he put 80k trouble free miles on it. But hey, I never said I'll by Audi again after my near-death experience with my '87 5000. But in '03, I couldn't resist the temptation of the understated beauty and quickness of the S8(first one), and bought another Audi. Same with Caddy, altho their current line-up(save for the awesome new Escalade) is not what GM has the potential to do, which is really sad as they are determined to be the "standard of the world" again.

So when the new LS arrives this year, I'll definitely check it out as that's what we car geeks do. If Lexus has tightened up on the suspenders and offers a "real" Euro-Tune sport option as rumor has it, then they may be in the running with the S63 that I'm contemplating.

ljflx · May 2006

You seem to have HELM very seriously confused with super cars that cost $200-300K and up. HELMs are mass market cars as they are made in large enough quantititiesand they are attainable by many in large cities and their nearby suburbs. That's why you see so many of them. In a given day I'll spot 20-30 of these cars within 30 minutes of driving, if it even takes that much time. Heck I bought bagels the other day and nearly got into the wrong car because an identical match was parked right next to mine. Across the diveide from me sat 2 S430's.

Wake up Steve. the dream is over - your arguments aren't arguments of any merit nor are they even worth discussing as everyone's points, including yours, are crystal clear by now. You just go on and on and on because your arguments are made purely for the sake of disagreement, borne out further by your purposeful barbs on people as Gary H so well pointed out. But I guess this is all done with "love".

merc1 · May 2006

Such an eloquently written post.

No longer going to structure my evenings around American Idol since Paris is gone. If I see it I see it if not then I don't. None of the remaining contestants deserve to win IMO.

I actually get tired of seeing Mercedes around here on a good Saturday!

M

hpowders · May 2006

So what you are saying is that Lexus should price the LS way up in the stratosphere to make it "unattainable" for most folks.
This really makes no sense at all.
A great prescription for the demise of Lexus.

One cannot force instant status through unreasonable pricing. Status will come with time and patience. Lexus will continue to gain in status as it becomes universally accepted. Let's see how it does in Europe first.

ljflx · May 2006

"No longer going to structure my evenings around American Idol since Paris is gone. If I see it I see it if not then I don't. None of the remaining contestants deserve to win IMO."

Not sure I agree with you that none of the rest deserve to win, as I thought katherine would win when they were in the final 24, but my wife and I were not happy about Paris' departure. I think she's a great talent, a great personable kid and will have a big career. I like Simon, but some of his barbs on Paris were irritating and totally unfair. For example she's 16, maybe 17 now, and he'd criticicize her for singing a love song beyond her years. Well think about that - why have a 16 year old allowed in the competition if you are going to say she looks foolish singing an older person song. It means she has to choose from a smaller playlist then someone who is older and can sing such a song because of his/her years. That means the competition isn't fair and needs to be tiered by age groupings, if he is judging like that. Simon has criticized Paula for making the judgments go beyond singing ability and then he goes and does the same, albeit in a different direction by saying she looked silly singing a love song. How she sang it is what mattered and in all this competition I can't find a song Paris sung that I'd grade below very good.

lexusguy · May 2006

Agree. Its quite simple, price goes up, volume goes down. Lexus isn't interested in being a Bentley. Even Bentley doesn't want to be Bentley in the old sense anymore. They could price the Conti GT up with the Arnage, and poof, there goes all of those new sales.

hpowders · May 2006

At $65k, I'm test-driving an LS this Fall.
I consider that a fine value for a re-designed LS with ML and navigation.
At Steve's "stratospheric" markup, I'm staying home.

Of course an even better value would be shopping for a 2006 LS 430 at the end of the summer. I wouldn't do it. The re-design is that significant to me.

As I "age", comfort and luxury are becoming more important to me.
Translation: I got used to those first class seats to Maui!

tagman · May 2006

lj - I owe you a personal thanks. You saved me from replying to steve's post, and I could never have said it better than you did.

TagMan

tagman · May 2006

Translation: I got used to those first class seats to Maui!

Uh oh . . . you've been bitten by the bug! Unfortunately, there's no cure . . . you're hooked for life. The good news is . . . you'll enjoy it.

We should all have problems like that.

BTW, trade-in the 545? No way.

TagMan

hpowders · May 2006

The 545 is very nice but it begs to be driven faster than I can do in most situations.
Not a great car for the USA at present.

oac · May 2006

Well said, Len...

I don't know about NJ where Steve lives, but here in San Diego, the *show-off your wealth city*, these HELMS are a dime a dozen... They are everywhere. Some neighborhoods, HELMS outnumber your average CamCord mainstream cars.

Saw an F430 just the other day and did a double take. Such a beautiful car. I've seen plenty of Massers/S600/Bentleys in La Jolla, Del Mar, and the uber-rich neighborhood of Rancho Santa Fe. A good friend of mine in the Navy has an S600 he totes around to work daily... Go figure. Does the Navy pay that much ???

oac · May 2006

"....19 cars....how do you keep them garaged?"

You're not the only person to ask this question on this thread. When I bought my property, there was an old barn that was about 8500 square ft. that I restored and made a 2-story garage out of..

Thanks for the response... The next time you want to discard one of these HELM cars, I'd be glad to take it off your hands for a small % of actual cost... Be nice and help out another car nut/yenta (apologies to Designman), will ya ?

:):)

designman · May 2006

Hpowders... You aint gettin a Lexus. I am almost willing to bet the ranch. I know the dyed-in-the-wool BMW buyers and youre one of them. The Lexicans throw a nice party around here, theyre smooth and charming, a pleasure to chat with and very convincing at times. But then the bimmerphile gets into a Lexus and drives it, its like someone threw a bucket of ice water over your head to get you out of bed. You say whoa, WHOA, what the hell am I doing!!! Wakes you up fast, especially if you go from a 5 to an LS.

As I "age", comfort and luxury are becoming more important to me.

Raspberries. Weve already aged and have made it past that excuse. BMWs are easier drive so they are better suited for both old goats and young whippersnappers.

Furthermore, if you can make it past Banglization and iDrive like you have, guess what youre here to stay buddy boy, chocolate chip cookies and all.

(Pssst... Oac shows a not-so-hidden weakness for bimmers. He could be here soon enough.)

;-)

ljflx · May 2006

"As I "age", comfort and luxury are becoming more important to me."

Translation from our vintage TV show - "The golden years are gone, we have hit the second plateau."

hpowders · May 2006

I hear what you are saying, but I plan on driving an LS 460 this Fall, and I will be going there with an open mind, but not an open wallet as Steve would have me do.

If the car's driving dynamics have been improved a bit, it could very well be a serious contender.

I will post my impressions at that time. Hopefully, I will pay enough attention so I won't be actually driving an ES by mistake-a sure characteristic of a third plateauer.

If the new LS can core a apple, well, then it's a done deal.

I kind of long for those second plateau days.

lexusguy · May 2006

While I'm sure the 2006s will have nice discounts, it doesnt make any sense to buy one when the '04s are exactly the same and will be that much cheaper. (And if you're willing to give up the 6-speed auto and a few of the gadgets, the '01s are "close enough", and can be had for under $30K).

Agree though this redesign is a biggie, and definitely worth it.

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