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And you have no idea what you are missing !! Lexus may not be for you, but you are doing yourself a world of dis-service if you are in the market for a luxury car and do not even consider a Lexus, if only for a test drive. That would only cost you time.
Regardless, you are entitled to your opinion. Other savvy buyers are placing Lexus at the top of their lux car/truck buying needs, hence its #1 position in the NA market. Quirky and all !!
On a different note, my COO drives a 2003 XJR, so that makes two Jag owners in my company. BUT, there are lots and lots of Bimmers on our parking lot. More so than any other car brand/model. Only a pittance few are Lexuses.....with me being the only LS owner. The guy next door to my office drives an A6 4.2, his previous car was an A8.
"There has to be an agreement on basic principles for rational discourse to take place"
This is true. So lets loose the what if scenario because it's not based anywhere near reality.
"You keep wanting to look at Lexus vs MB as on a model by model basis, saying that on a overall (all SUVs + all cars) basis, MB’s unit sales performance is explained by higher model-by-model prices, and that the higher prices aren’t simply compensation for higher prestige/heritage. Well, if that were true, wouldn’t we find that the model matchups where MB is most expensive (relative to Lexus) are the ones where MB sells poorly, and that the matchups where MB is priced similarly to or less than Lexus are the ones where MB sells well? "
You're confusing two issues here. This conversation was never about why a Mercedes costs more, only that they do. Who cares why, for the sake of this discussion. We're talking about sales vs price and vice versa. They "why" question is for another topic, and there have been some incorrect theories cast about that in here already anyway.
"In fact the exact opposite is true. It is the matchups where MB is priced similarly to or less than Lexus where MB has its greatest sales weakness. The C-class compared to the ES and IS. And the M-class, compared to the RX and GX. In the other lines, where MB is priced higher than Lexus, MB generally sells the same or higher numbers than Lexus quite the opposite of what your theory implies. (The only exception is the G vs LX, where MB is priced higher and does sell less; but since the LX isn’t a big volume seller itself, the unit [as opposed to percentage] difference isn’t large, so this doesn’t go very far in explaining why Lexus outsells MB)."
Again, the IS300 and ES330 are not even close to being the same car, so why are you constantly trying to lump them together? The C-Class outsells the IS300 by about 3 to 1 on a yearly basis. The ES330 outsells the C-Class, again I've stated this a many times.
The ML doesn't sell better because, again like I've admitted before, its clearly not up the Lexus SUVs, and it's in its 7th model year, and the Lexi are brand new. You're right here, price has little to do with it due to fact the ML is priced similarly to the GX and RX. That is but one exception.
If these are the only two product lines between Mercedes and Lexus in which Mercedes is price competitive, how in the world can that offset the often medium to very large price differences between the GS and the E-Class, S vs LS, SC vs SL, LX vs G, SC vs certain CLK models, and to mention the CL of which there is no Lexus competitor. You're only looking at the lower half of the Mercedes lineup.
"Here’s my theory. I think that prestige/heritage has a value, and that people will pay extra for it. But people who are concerned about prestige will, if they can afford it, buy towards the high end if they buy a C the neighbors will know that they’ve got the cheapest MB. So MB is able to extract a bigger “prestige premium” (pricewise) on the E and S than on the C or ML350, for example, and still sell well. And since people at the low end are not as concerned about prestige as those at the mid-high end, other factors become more important like reliability, roominess, etc. So in my view it isn’t price that explains MB’s sales vs Lexus it is PRODUCT (or product, reliability, service, etc). For the C, where MB sells fewer units than Lexus despite lower starting prices, maybe those factors are roominess, reliability, service. As for the ML well, you’ve said yourself that MB has a product problem there, that the vehicle isn’t that desirable."
There are lots of places where this theory doesn't jive with reality. People will pay for prestige yes, but that is only half of the situation.......the other half of that is they'll pay for it WHEN THEY CAN. Prestige means nothing when you want a SL500, but can only afford a SC430. The 30K price difference will, more often than not, make the decision in favor of the SC430. There is no way possible that this kind of price difference doesn't account for some lost sales for Mercedes-Benz.
Ferrari and Porsche are held by many to be the best sports car builders on earth. It depends on who you ask as to which is best. Generally Ferrari gets the nod, but it's a fierce debate. There is no debating however when it comes to sales of the two brands. Price is what keeps a Ferrari out of garages of tens of thousands of buyers, many of whom a Porsche is no-sweat to acquire.
Yes, other factors play a role in cars sales, again, I've mentioned this many times before. Reliability, comfort etc, etc, the list is endless, but to say that price has nothing to do with a brand like Mercedes' who's lineup is skewed upwards of 50K is cleary incorrect.
Look at this:
http://www.mbusa.com/brand/index.jsp
Select the "Model Selector" on the left side.
Without even looking to see how many, do you see where most of those cars land on the price chart? The high side. The numbers: There are 14 models below 50K, with the E320 being right on the border at 48K, which you probably can't find at that price on a dealers lot. There are 23(!) models priced above 50K, of these there are 15 priced at 70K or above, right where Lexus tops out at. Of that 15, 8 of them are priced at 90K or above!!!! There is no way this type of pricing doesn't have an effect on overall Mercedes sales.
The bottom line is that Mercedes is only price competitive with 2 lines of cars, the rest are prices higher than the competiting Lexi, and thus really shouldn't be able to sell in the numbers they do. Yet you initially tried to state that the "market" didn't think much of Mercedes' cars, yet when you look at the numbers the only thing they are missing is the SUV component. Lexus better hope the next ML, and the new GST (R-Class) and the new G-Class don't catch on.
The correct thing to say would be that the market doesn't think much of Mercedes' ML (and neither do I), but they obviously think a great deal of their *cars* because despite their higher prices they buy more of them overall and model line vs model line, except in the case of the ES vs the C-Class.
M
buyers. Otherwise why would anyone buy an Accord or Camry when a 3series or C-class is also within reach."
We're not talking about a "pure bred enthusiast" here. That type would only buy a M Series or to a lesser degree an AMG car. I'm talking about people who look for more than leather, stereos and nav systems as the key ingredients in their cars. People that actually mention driving the car as opposed to "how soft it rides". Other things like styling, handling, performance, design. I hardly think the average Camry or Accord buyer can afford anything other than a base 3-Series or C-Class. Most Camrys and Accords sold are stil mid-grade models, most with 4-cylinder engines, not the top line XLE and EX-V6 models.
"My point is that good business plays to where the money is not where the enthusiast is. MB and BMW missed the whole change to the SUV market badly. Maybe they cared too much about the enthusiast."
Not hardly, they did just that, play where the money is, just not where all of it is. You seem to imply that Mercedes and BMW haven't been a success at what they do, building cars. They are the two leading luxury car sellers in the world. The SUV game is new to them, just as building anything with a performance bias is new to Lexus. If BMW and Mercedes missed the boat in SUV game, Lexus surely missed a different boat with their cars. The SUV is but one component of the market. BMW and MB have to cater to much wider audience than Lexus does all around the world and on that scale Lexus doesn't even begin to compare. Like I said before you view on the market can go either way.
M
M
I sure can't find them. So I am assuming that all of the posts that have occurred here about such are just hypothetical.
Toyota's reported net income under the Japanese GAAP is about half of their net income under US GAAP. But going forward from 2003 they will use U.S. GAAP for public reporting.
There hasn't been an operating loss at Toyota in the last decade. These guys are funding their entire automotive operation out of free cash flow.
On the conservative angle, one of the advantages of the way TPS works is that it is an 'inventory-less' manufacturing system. They build to order for their distributors. Their suppliers ship to the build plan. They modulate their build rate to market conditions, which for the last 10 - 12 years has been nothing but increasing unit sales.
You never see these guys with 18 warehouses full of routers in San Jose like Cisco.
Lexus sales figure as compared to MB/BMW will always be hampered to a certain degree in this regard, as a high trim Toyota Avalon/Solara/camry with the ingredient/options to be classified as a luxury car will be counted towards Toyota sales, and a low trim C class/3 series, which in reality does not have higher luxury/content, still counts as MB/BMW sales.This is even more true if you look at world wide sales figures, as many low power/diesel,low trim MB/BMW (which includes cloth seat C class, E class, even S)which are not even offered here in N.America, are sold, many as taxi's, whereas in Japan & Asia, it's mostly the Toyota's(which have no Lexus equivalent)that are used as taxi's.
My point is that you can never fairly compared sales figure of Lexus versus the traditional luxury brands, & I agree with what some has mentioned here before that higher sales does not mean better in this discussion.
Pablo - I understand your point well. The Jaguar XJ is a great car but it has no appeal whatsoever to me. But I wouldn't say never abiut Lexus. If they build a car that excites you I'm sure you would put it on your short list.
There's one car Lexus has in its offering that made it close to my radar screen, though: the SC430. But I decided I wanted a 4 seater convertible, otherwise I might have picked it, the interior is fantastically executed, and the car is very competent all around. I find the SL overpriced and unnecessarily busy design-wise, way too many character-lines thrown in. But I like 2 door designs because of optics, then I typically don't like ultra-sharp sportiness, because I seldom see the point: there's strict speed limits in CA, the highways are of terrible quality, plus I do own a motorcycle that'll make any sportscar feel uninvolving. Thus, the SC fit the bill reasonably well, perhaps next time out.
Here is the relevant reference and link.
Other Business
In fiscal 2002, revenues from other operations fell 31.8%, to ¥728.8 billion, and operating loss contracted from ¥4.6 billion in the previous fiscal year to ¥3.0 billion. The primary cause of this substantial drop in revenues was the elimination of IDO Corporation (now KDDI Corporation) from consolidation in the second half of the previous fiscal year and the transference of Toyota’s industrial equipment and logistics systems operations to Toyota Industries Corporation from fiscal 2002.
Operating loss declined mainly due to the decrease in expenses associated with the development of intelligent transport systems.
In 2001 and 2002 operating losses were ¥4.6 Billion and ¥2.96 Billion yen respectively.
http://www.toyota.co.jp/IRweb/invest_rel/annualreport/annual_repo- rt02/business/other_business.html
However, at $30million it's small change to a company coming up on $10 billion in profits on $160billion in revenue this year. They took bigger losses from securities investments in 2000 by 10x that and didn't even blink.
Earlier references to Toyota's "loss" were making it look like they were in trouble or recovering from it.
But I'll never buy cars based on what Wall Street says on the company's operations performance, it means nothing to me when making a car choice. And I doubt the majority of car buyers overly cares about the financial performance of the company that built their car.
gscoupe and ljflx,
Your suggestion that we consider the RX to be a car is interesting, but we’re just not going to find any data on how many RX owners considered a wagon vs how many considered a competing SUV. If we knew that we could apportion a certain fraction of RX sales to the SUV side and the rest to the car side who knows, maybe Lexus would then beat MB in both cars and SUVs. (Just a possibility, as I said we have no data.)
Merc1,
You wrote, “People will pay for prestige yes they'll pay for it WHEN THEY CAN. Prestige means nothing when you want a SL500, but can only afford a SC430.” My response is that one of MB’s strengths is its broad product line. You know as well as I do that buyers who can’t afford the SL can and sometimes do buy the CLK. Some of your beloved carmags even put the SC and CLK in the same comparo. And as for the LS and S, you well know, and I have even seen some examples on Edmunds boards, that sometimes LS prospective buyers cross-shop vs the E, not the S. So whether it is the SC430 vs CLK500 cabrio, or LS430 vs E500, there are choices out there for the prestige-loving MB fan that doesn’t have the cash for more car. He isn’t in a situation where he “can only afford a SC430” or LS430.
Your analogy of Porsche/Ferrari vs Lexus/MB is a flawed one because in the Lexus/MB case, MB’s price range fully encompasses Lexus’ MB’s low end starts 13% LOWER than Lexus’. Whereas in the Porsche/Ferrari case, Ferrari’s low end price starts 238% HIGHER than Porsche’s.
Only a short time ago, Toyota had a huge loss, which makes me take their one year profit streak with a grain of sand. Business Week and ...
>>> I believe that both of these were incorrect.
It might be easy for casual readers here to get the wrong message.
There was no 'huge' loss at Toyota and their profit streak is about 15 years old ...
They fund their auto operations out of free cash flow, while the DCX's of the industry are up to their eyeballs in debt.
You could buy a C320 instead of a S500 too, that isn't the point. The point is where the cars line up, you know the ones that are supposed to be compared. The E-Class and the CLK do compete with the LS and SC, to a degree, especially with the E vs the LS, the LS is clearly "more" car for the money. If were to even mention sales of the E-Class compared to the LS430 you bring up price and class in a heartbeat. The cars are in small, medium, and large. C/ES/IS, GS/E, LS/S, the prices are higher for the MB in every case except the base C230 vs the IS300 and ES330. The CLK/SC/SL could all compete, sure.
You're just reaching for things now, but in the end Mercedes' cars still cost a lot more. Buying a different Mercedes still doesn't take away the fact that MB has those higher priced cars. If everyone thought like that nothing above 70K would sell at Mercedes-Benz. They sell EVEN LESS cars overall, which illustrates my point. Price hinders sales.
"MB’s low end starts 13% LOWER than Lexus’."
When are you going to look at the entire range from Mercedes and Lexus side by side, instead of just the bottom end? Mercedes has at least 8 cars that start above any Lexus, that more than cancels out the 3 models that start below Lexus'. You are flat out ignoring where the bulk of Merceds' cars are priced. The C class is only ONE MODEL RANGE. Look at where the other start/end at. You're pretending those upper end MBs don't exists.
The only market needs Lexus is serving better than Mercedes is the SUV market's needs. In cars they don't offer nearly the choices.
M
Suppose there is a housing developer who is building new homes on a large tract of land. Suppose that he offers only two models, “m4” which has 4000 sq ft on 1 acre, and “m5” which has 5000 sf on 1.25 acres. You question customers’ ability to pay for the higher-content product, saying that it is impossible to sell in the same quantities if one is priced higher. I submit that if m5 is priced only slightly higher than m4, say 5%, then it will not only sell more units (directly opposite what your theory implies), but it will probably sell MULTIPLE TIMES as many units as m4. Similarly if the developer tries to price too much for the extra content, say 45%, then m4 will outsell m5 by multiple times. If follows that there is a some price premium between 5% and 45% where the two will sell in EQUAL numbers, DESPITE m5 being priced higher. I don’t know if that premium will be 20% or some other number, but the important point is that if a product has higher content, be it size or prestige, it CAN command a significantly higher price and still sell in equal units. Get it?
We can see this principle in operation in the real world. I recall you posting that in some years the S500 outsells the S430. How can this be if your theory is correct, namely that higher priced products have to undersell lower priced ones, even if they offer “more” of something. My answer: that when there is more content, which in this case means larger engine, better standard equipment, more prestige associated with the S500 badging, then as long as that content is priced appropriately the S500 can sell in similar units to the S430. Get it?
Or take another example from the MB world. In some years at least, CLK coupes outsell the C coupes (per autosite.com). And in some years, E sedans outsell C sedans. Not consistent with your theory that higher-content, higher-price products can’t possibly outsell lower-priced products. But consistent with my theory that higher-featured products, if priced appropriately, can sell in the same or even higher quantities. Again, prestige is just like a feature in that people will pay extra for it.
Soooo .your claim that MB’s higher pricing is a unit sales handicap isn’t necessarily so. We all know that MB, across the board, offers more prestige and heritage than Lexus. That is like a feature or content that people will pay extra for. And as long as a product has more content, it can command higher prices and still sell the same number of units or higher units than the lower priced competition. So long as the extra content isn’t OVERpriced (like a 25% larger house at a 45% higher price), which you haven’t demonstrated.
You wrote “Price hinders sales” but it should really be “price hinders sales if not accompanied by appropriately higher content.” MB’s higher prestige/heritage constitutes higher content.
Prestige adds perceived value to some buyers - we can argue about what percentage of buyers this is, but fact it is the essence of luxury brands to carry price tags that are in absolutely no way related to cost considerations.
Now prestige is a feeble thing, on the other hand, and luxury brands can be run into the ground and lose cache if not managed skillfully or if they simply run out of luck (which is a factor in life and business). It is not easy to engineer a brand, they do take a life of their own image wise and it is impossible to control several of the associations people have with a brand. Theories on that abound. It just happens. In Europe, Mercedes does little for brand management these days other than simply demand a premium over what competitors charge. Whether that will have any repercussions remains to be seen. In the USA, Mercedes seemingly tries to engineer the upscale image a tad bit more, which is probably aided by the fact the US market does not reward ultra-compacts and small displacement engines anyhow - even if they offered them they probably wouldn't sell all that well.
But the Mercedes brand is an interesting study when it comes to mass market psychology.
"We can see this principle in operation in the real world. I recall you posting that in some years the S500 outsells the S430. How can this be if your theory is correct, namely that higher priced
products have to undersell lower priced ones, even if they offer “more” of something. My answer:
that when there is more content, which in this case means larger engine, better standard
equipment, more prestige associated with the S500 badging, then as long as that content is priced appropriately the S500 can sell in similar units to the S430. Get it?"
Got it. This was clearly shown just recently in the C&D comparo, for 87K (S430), the overwhelming majority of MB buyers would pick a S500, which would give you more for that 87K. Thats the first reason for the S500 outselling the S430, the next would be that once you've reach the point of looking at a 73K car, a 80K one isn't nearly the stretch between a LS430 and a S500, as you try to imply, the cars have a huge base price difference. Only a LS430 Ultra(?) buyer at 71K could think about looking at a 73K S430 or a 80K S500, the buyer looking at the base LS430 at 55K, isn't going to just say, oh the S500 is more prestigous, let me shell out another 25K. To assume everyone can make this kind of leap is pure fantasy. I'm sure there are some LS430 buyers that can afford a Maybach and everything else in between, but the average one can't. Not all S-Class buyers could either. Note: Not saying this the same kind of price leap, just using this for emphasis.
Question: what does any of this have to with Mercedes' sales vs Lexus'? Not much. This has nothing to do with, again what you've ignoring here, that most of Mercedes' cars are still priced higher than Lexus'. What Mercedes models outsells another is completely irrelevant in this conversation.
"Or take another example from the MB world. In some years at least, CLK coupes outsell the C
coupes (per autosite.com). And in some years, E sedans outsell C sedans."
Lots of things wrong with this. First of all the CLK has 6 models, the C Coupe has only 2, and
try as they might, MBUSA, will never tell you that all C Coupe sells are of the C230 Coupe, I have never, ever seen a C320 Coupe in a lot or on the street. Secondly we're talking about a completely different price range and buyers here. The C Coupe is bought by first-timers to the MB brand, the CLK isn't.
" Not consistent with your theory that higher-content, higher-price products can’t possibly outsell lower-priced products. But consistent with my theory that higher-featured products, if priced appropriately, can sell in the same or even higher quantities. Again, prestige is just like a feature in that people will pay extra for it."
You're talking about within the MERCEDES-BENZ lineup, not MERCEDES vs LEXUS. Again, you're reaching for another point that has nothing to do with what you and I have been talking about here. I could have told you the very same things you've posted, within the Mercedes lineup. No news there.
We all know that people are willing to pay for a car for whatever reasons, prestige, performance, whatever, but you've continually missed is they only do this if the CAN DO IT. Your theory misses this by a country mile, you're assuming that everyone can afford to buy whatever they want.....this is so not true. A S500 could be the most critically acclaimed, prestigious car ever made, but unless you have 80K it doesn't matter. A LS430 is much cheaper, by about 25K, and you think that doesn't prevent a car like the S500 from selling more units you're sorely mistaken and clearly not dealing in real world.
"And as long as a product has more content, it can command higher prices and still sell the same number of units or higher units than the lower priced competition."
So I take this as you saying that say a SL500 and a S500 offer more content than a SC430 or a LS430, I could have sworn you were the same person that said these cars didn't even come close to justifying their price premiums over their Lexus competition. You can't have it both ways, they either do or they don't. Since you've admitted that Mercedes either sells as many or outsells Lexus' cars then I guess this statement was wrong from the start:
"And I'm saying that the buying public, on balance, doesn't feel the high prices are worth it...which is why MB isn't number 1 in unit sales."
Corrected: The only Mercedes that the market doesn't think much of is the ML. They think quite highly of their cars, in fact going by sales numbers, they think of MB's cars higher than Lexus' due to in many cases a whopping price difference not being a factor in MB selling more actual "cars" than Lexus does. This is most clearly demostrated by you. You've tried to state that prestige is the big equalling factor here, which it isn't (see above), but lets go along with that for a minute. If thats the case, then all Mercedes is missing is the SUV factor then right? Since their cars outsell Lexus' quite easily in most cases. I've said just that all along, but you in your statement above you said "MB isn't #1 in unit sales" implying that entire brand's cars weren't worth the price. You, yourself have proven this not to be true, after I already proved it by pointing MB vs Lexus sales, model line vs model line.
Your initial theory is hugely flawed also because you're not taking into consideration all those models MB has above 70K? Are they not trying to sell those too? Does Lexus even compete past 70K? How could a company that has so many higher priced cars than a competitor, outsell that competitor when that competitor specializes in 30-50K automobiles, when the majority of the more expensive brand's cars are priced over 50K, with some of them over 90K? Look at the price chart given earlier. Again, where do most of MB's models land? How is Mercedes supposed to outsell Lexus when Lexus' biggest sales numbers are produced by their SUV, of which they have three volume SUVs compared to Mercedes' one? Please don't tell me the G-Class is a volume SUV when its projected volume is 1K units yearly, and the "variant" of the G is a 95K AMG model.
Nobody is contesting or disputing anything about what people are or are not willing to pay for. I never contested this, you brought this up in an attempt to steer away from your initial theory being wrong. Your whole basis was that Mercedes should have no trouble outselling Lexus, and yet you've yet to even address certain points, only to come up with more "what if" questions. Look at the two brands price and model layout on their websites, anyone can see Mercedes in reality has no business even being in a sales race with so many cars priced more than any of their competitors.
M
ljflx,
As long as you are not trying to imply that Mercedes is the only brand that is bought for prestige sometimes, then there is no issue with that statement from me. I agree that everyone should buy they car they want, otherwise for the money I have to spend I'd get a C230 Sedan and call it a day, but I don't want one.
I know what you're going to say, but I'll ask anyway. I know back in 2001 you looked at the LS430 vs the S430/500 and you bought the LS430. My question is, if the S500 would have been priced closer or nearly the same as the S500 would you have bought the S500 or at least considered it more heavily. I think I know what you're answer will be because of the conversation I'm having with syswei, but I figured its worth a shot. My point is that I know you can afford either, but wasn't the MB knocked for price, in addition to the nav/ride/reliability concerns? Or better yet did the price make the things I remembered you listing as negatives that much harder to overlook????
M
BTW, I think the BMW 6 series is the best looking Bangle design yet. I don't know if it'll appeal to everyone, but at least not nearly as hideous as the Z4.
I know quite a few folks that have acquired a BMW, Lex or MB in the last few years. Most of them call their accountant or financial advisor and say "Hey, I am going car shopping for new Merc or whatever, should I lease or buy? Next questions has to do with source of funds..."
If so, then another big factor here besides prestige and heritage and 0-60 times, is the resale value and the amount of manufacturer's support.
Cars like MB's and Lex carry pretty good residuals, while BMW tends to be less and Audi/Jag are in the tank. Also, Lex has good money factors from TFS and MB is getting more agressive from MBCC since their inventories have risen here.
Take an 80K car with a 60% residual - you pay for 32K worth of depreciation 56K average loan with nothing down.
Take a 70K car with 50% residual - you pay for 35K depreciation and 51K average loan.
Depending money factors the difference can be very small.
So I don't get the Encyclopedia class discussions on this issue. It ain't about price. It's about deal and cash flow.
I always tend to lease because I like a new car and the latest stuff every three years. But as well I find it very difficult to justify a purchase financially - on the cars in this arena. Lower end cars are a different story. I just worked a GX deal at $745 per month with 0 down. I could have bought it but using a 3.5% return on the money I would have laid out over three years upfront (and same on 3 years of lease payments) the price worked out to be $250 cheaper if I lease and buy at lease end (including the lease fee of $500) rather than buy upfront. In 2001 with interest rates a bit higher it was about $1,000 more to lease my LS430 than buy upfront (half of that was the lease fee). So why buy when you can try out the car for three years and decide later and either save some money or spend a tad more. If you decide to buy at lease end and pay a tad more consider it an insurance policy on getting a quality car that pleases you.
Merc1 - I think our HR handbook is shorter than your last two posts. As for prestige - people buy certain things to impress others rather then themselves. It happens most often with what is seen as the highest price commodity - MB, Rolex etc. But it spreads out very well to the BMW's, Jags, Lexus etc. of the world as well.
What irritates me slightly is having someone who does not have an MB (probably cannot afford 99% of them) talk so authoritatively and berate others who, at least, put their money where their mouth is. Someday, Merc1, you will finally own an MB, and we can all rest in peace ! Sorry to make this personal, but these long-winded diatribes gotta end somehow.
I know quite a few folks that have acquired a BMW, Lex or MB in the last few years. Most of them call their accountant or financial advisor and say "Hey, I am going car shopping for new Merc or whatever, should I lease or buy? Next questions has to do with source of funds..."
If so, then another big factor here besides prestige and heritage and 0-60 times, is the resale value and the amount of manufacturer's support.
Cars like MB's and Lex carry pretty good residuals, while BMW tends to be less and Audi/Jag are in the tank. Also, Lex has good money factors from TFS and MB is getting more agressive from MBCC since their inventories have risen here.
Take an 80K car with a 60% residual - you pay for 32K worth of depreciation 56K average loan with nothing down.
Take a 70K car with 50% residual - you pay for 35K depreciation and 51K average loan.
Depending money factors the difference can be very small.
So I don't get the Encyclopedia class discussions on this issue. It ain't about price. It's about deal and cash flow.
The leasing difference is not small. Go to the respective websites and give it a try: leasing comparatively equipped S430 or LS430 turns out to be $1458 vs $989. Quite significant. You also have someone who looked into both talking about about $375 a month. So it *is* a very real money issue, and one's got to decide whether the star is worth the costly premium. Some say yes, some say no.
Mercedes recipe for success going forward is obviously to keep as many people as possible going for the premium, while the competitors will make that as tough as decision as possible.
Buying any car over $30k is, after all, an irrational act to some degree.
My wife is different, and a bit like my mother -Freud would be proud- in her car brand preferences. Rationally, she thinks many cars are very neat. But she will go Merc brand every time, even when she shies away from blowing the money on the more expensive offerings (I am happy about that).
I should also point out that I think the Merc CL is *the* car. I would get it, I could get it, but I prefer to wait until the day where I truly feel I have "arrived" until I celebrate with treating myself to a new CL. Besides, they are damn expensive in maintenance once the warranty runs out, and I do shy away from loading up re-occurring expenses these days...
If you and your wife doesn't like that car (and the lexus) name....I surrender.
There is nothing not to like including the price.
What me and syswei were doing is debating, and we did so with much more civility than many a debate we have ever had in here about MB and Lexus. If you don't like my posts then don't read them, its about as simple as that. Putting me down by saying (assuming) about what I can or can't afford is you trying to berate me now, of which I didn't do to anyone during this debate. If you don't like what I have to say fine, but you made it personal this time, I didn't. Period.
M
I've also heard that some buyers can justify paying more for a Mercedes or a BMW rather than a comparable Lexus or Infiniti because they can end up losing the same among or even less in depreciation over the period of ownership despite the higher price tag.This is definitely true for some Mercedes & BMW models because of their heritage & name.
To claim that higher price will hinder sales, while true in some cases, is a way too simplistic way of looking at it, as there are many other factors involved as well.
if the XJR wasn't for me, you can rest assured a more vanilla sedan like the ES is not going to set my world on fire, either. The only candidate is the SC430, as I explained earlier. It is not that I have a bias against Lexus as a brand, by the way - I am fully aware and have always stated their cars are phenomenally engineered.
gscoupe -
I agree with everything you say, but the key is to not start lumping the majority of buyers of any brands into certain categories, as some have done. Certainly not every Mercedes buyers is irrational, nor is every Lexus buyer rational. And if with luxury cars it was just a matter of raising the price to maximize appeal, you'd have all these cars being sold at over $200k. But oddly enough, the over $100k market seems to stay constant in units, and it seems more offerings -as have become available recently- do not increase sales at all, a sure indication the super-rich as a rule do never spend what they *can*, but rather that they are governed by fiscal self-discipline. Due to my job, I work with many multi-millionaires (tragically, I am not one myself and the vast majority of them is rather spartan in their car buying habits.
Everywhere I go I see S-Class of some nomenclature. Every type of person driving them. I also know 6 people who have '01-'04 S classes (ok, 3 of those have traded them in on more "exclusive" cars - 2 LSs and one Q45).
I don't see the LS430 everywhere and the person behind the wheel, when I do see one, is someone with whom I can relate.
So, I guess for exclusivity, the LS430 wins, hands down.
Of course MB RAISED their prices for '04, with no real updates. What are they thinking? Oh, yes, I know. Those "look-at-what-I'm-driving" types will pay that price for a sub-standard vehicle without question before they will be buy some piece of "[offensive geographical slur ommitted]-crap".