Luxury buyers switching to non-luxury brands
12-24-09, 11:46 AM
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Luxury buyers switching to non-luxury brands
Luxury car buyers spending less for the holidays
By TOM KRISHER and DAN STRUMPF (AP) – 21 hours ago
DETROIT — This holiday season, the luxury car buyer is offering a simple phrase: I'm not spending too much.
Wealthier shoppers are trickling back into showrooms after staying away much of the year. But there's a catch. Many are pinching pennies, sort of, by choosing smaller BMW and Mercedes models, or they're buying top-of-the-line cars from cheaper brands.
This year, almost 14 percent of luxury buyers replaced old vehicles with brands other than traditional high-end names such as Audi, BMW, Cadillac, Infiniti, Jaguar, Lexus, Lincoln, Mercedes and Porsche. That's up from just 4 percent in 2006 and a reminder that these buyers still don't feel as wealthy as they once did. Home values are still down and portfolios shrunken, despite the stock market's gains this year.
Two potential beneficiaries of the shift are Buick and Hyundai, brands offering luxury models that are much cheaper than Beamers and Audis.
Buick for years was known for cushy, boring sedans normally found outside grandma's house. The average Buick buyer is still about 70 years old, and the brand is desperately trying to attract younger drivers and reverse a sales slide, says Aaron Bragman, an auto industry analyst with Global Insight in Troy, Mich.
This may be its opportunity.
After years of ho-hum styling, blase interiors and soft suspensions that made driving a chore, Buick's new LaCrosse luxury sedan is far sportier than its predecessor. It's got crisper handling and sleeker styling designed to appeal to people in their 40s and 50s. It also includes on-board hard drives and other electronic gizmos for younger drivers, all while costing $5,000 to $20,000 less than European and Japanese luxury competitors.
At $27,000, Buick's German-designed LaCrosse performs as well as its more expensive competitors, yet has everything luxury buyers are seeking, Bragman says.
That's important because luxury shoppers are picky, even when they economize. While many are now willing to give up a prestigious name or a bigger car, they still want cutting-edge styling along with reliability and safely. They demand tight handling and a quiet ride. The car must have excellent fit-and-finish inside and out and features such as heated leather seats and navigation systems.
"They may very well be downsizing in terms of the package. They're not downsizing in terms of the features they want," says Art Spinella, president of CNW Marketing Research of Bandon, Ore.
That's just what Craig Bierley, Buick's product marketing director, is thinking. And he says the brand is capitalizing on the trend.
"People are reconsidering the choices on the things they spend money on."
LaCrosse sales took off after a new version arrived in showrooms last summer. Sales rose 63 percent last month.
The new LaCrosse, Bierley says, has quadrupled the number of buyers it attracts from other luxury brands. In December, Buick dealers are reporting even more trade-ins of Lexus and Infiniti models, he says.
Another winner is Hyundai's Genesis, which has received stellar reviews for its luxury and handling but can cost $15,000 to $25,000 less than higher-end cars.
Joan Sher, a Fort Lauderdale, Fla., real estate agent, switched over last month when she gave up her Mercedes GL450 sport utility vehicle for a loaded-out Genesis.
Replacing the Mercedes would have cost more than $60,000, so Sher opted for value and spent $44,000 on the Hyundai.
"It's more affordable but at the same time a very comfortable car," she says.
Even with a small resurgence for the holidays, luxury car sales are down 27 percent so far this year. But November sales fell just 8 percent, and dealers are reporting increased traffic this month.
Those trends reflect revived confidence among consumers. In the third quarter, net worth — the value of assets such as homes, bank accounts and investments, minus debts like mortgages and credit cards — rose 5 percent, to $53.4 trillion, the Federal Reserve says. It was the second straight quarterly increase. Personal incomes rose in November at the fastest pace in six months.
Yet even with those gains, Americans' net worth remains far below the peak of $64.5 trillion reached before the recession.
Buying a cheaper car brand is one way to save money. Another is trimming size.
Rick Case, who owns a chain of dealerships including Acura and Audi in Georgia, Ohio and Florida, says many shoppers want smaller, less-flashy cars.
At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent.
The number of luxury buyers replacing their cars with smaller vehicles has tripled to 16.7 percent in the past three years, according to data gathered by CNW. Larger Lexus, Mercedes and BMW models generally have taken big hits and many analysts predict the downsizing will continue as people try to keep costs down in an uncertain economy.
CNW's Spinella disagrees with that assessment.
CNW has tracked auto sales for 28 years. It says people downsized during every economic slump but returned to their old ways upon sustained recovery.
But George Pipas, Ford Motor Co.'s top sales analyst, says that this recession changed free-spending habits of the past two decades, making people more cautious.
That frugality, combined with the government's push for more fuel-efficient vehicles and concern over global warming, will likely sustain the trend of going smaller, he says.
"Consumers are going to be more likely to spend within limits, to reconcile their spending with their income," Pipas says.
Copyright © 2009 The Associated Press. All rights reserved.
By TOM KRISHER and DAN STRUMPF (AP) – 21 hours ago
DETROIT — This holiday season, the luxury car buyer is offering a simple phrase: I'm not spending too much.
Wealthier shoppers are trickling back into showrooms after staying away much of the year. But there's a catch. Many are pinching pennies, sort of, by choosing smaller BMW and Mercedes models, or they're buying top-of-the-line cars from cheaper brands.
This year, almost 14 percent of luxury buyers replaced old vehicles with brands other than traditional high-end names such as Audi, BMW, Cadillac, Infiniti, Jaguar, Lexus, Lincoln, Mercedes and Porsche. That's up from just 4 percent in 2006 and a reminder that these buyers still don't feel as wealthy as they once did. Home values are still down and portfolios shrunken, despite the stock market's gains this year.
Two potential beneficiaries of the shift are Buick and Hyundai, brands offering luxury models that are much cheaper than Beamers and Audis.
Buick for years was known for cushy, boring sedans normally found outside grandma's house. The average Buick buyer is still about 70 years old, and the brand is desperately trying to attract younger drivers and reverse a sales slide, says Aaron Bragman, an auto industry analyst with Global Insight in Troy, Mich.
This may be its opportunity.
After years of ho-hum styling, blase interiors and soft suspensions that made driving a chore, Buick's new LaCrosse luxury sedan is far sportier than its predecessor. It's got crisper handling and sleeker styling designed to appeal to people in their 40s and 50s. It also includes on-board hard drives and other electronic gizmos for younger drivers, all while costing $5,000 to $20,000 less than European and Japanese luxury competitors.
At $27,000, Buick's German-designed LaCrosse performs as well as its more expensive competitors, yet has everything luxury buyers are seeking, Bragman says.
That's important because luxury shoppers are picky, even when they economize. While many are now willing to give up a prestigious name or a bigger car, they still want cutting-edge styling along with reliability and safely. They demand tight handling and a quiet ride. The car must have excellent fit-and-finish inside and out and features such as heated leather seats and navigation systems.
"They may very well be downsizing in terms of the package. They're not downsizing in terms of the features they want," says Art Spinella, president of CNW Marketing Research of Bandon, Ore.
That's just what Craig Bierley, Buick's product marketing director, is thinking. And he says the brand is capitalizing on the trend.
"People are reconsidering the choices on the things they spend money on."
LaCrosse sales took off after a new version arrived in showrooms last summer. Sales rose 63 percent last month.
The new LaCrosse, Bierley says, has quadrupled the number of buyers it attracts from other luxury brands. In December, Buick dealers are reporting even more trade-ins of Lexus and Infiniti models, he says.
Another winner is Hyundai's Genesis, which has received stellar reviews for its luxury and handling but can cost $15,000 to $25,000 less than higher-end cars.
Joan Sher, a Fort Lauderdale, Fla., real estate agent, switched over last month when she gave up her Mercedes GL450 sport utility vehicle for a loaded-out Genesis.
Replacing the Mercedes would have cost more than $60,000, so Sher opted for value and spent $44,000 on the Hyundai.
"It's more affordable but at the same time a very comfortable car," she says.
Even with a small resurgence for the holidays, luxury car sales are down 27 percent so far this year. But November sales fell just 8 percent, and dealers are reporting increased traffic this month.
Those trends reflect revived confidence among consumers. In the third quarter, net worth — the value of assets such as homes, bank accounts and investments, minus debts like mortgages and credit cards — rose 5 percent, to $53.4 trillion, the Federal Reserve says. It was the second straight quarterly increase. Personal incomes rose in November at the fastest pace in six months.
Yet even with those gains, Americans' net worth remains far below the peak of $64.5 trillion reached before the recession.
Buying a cheaper car brand is one way to save money. Another is trimming size.
Rick Case, who owns a chain of dealerships including Acura and Audi in Georgia, Ohio and Florida, says many shoppers want smaller, less-flashy cars.
At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent.
The number of luxury buyers replacing their cars with smaller vehicles has tripled to 16.7 percent in the past three years, according to data gathered by CNW. Larger Lexus, Mercedes and BMW models generally have taken big hits and many analysts predict the downsizing will continue as people try to keep costs down in an uncertain economy.
CNW's Spinella disagrees with that assessment.
CNW has tracked auto sales for 28 years. It says people downsized during every economic slump but returned to their old ways upon sustained recovery.
But George Pipas, Ford Motor Co.'s top sales analyst, says that this recession changed free-spending habits of the past two decades, making people more cautious.
That frugality, combined with the government's push for more fuel-efficient vehicles and concern over global warming, will likely sustain the trend of going smaller, he says.
"Consumers are going to be more likely to spend within limits, to reconcile their spending with their income," Pipas says.
Copyright © 2009 The Associated Press. All rights reserved.
12-24-09, 04:22 PM
#3
Lexus Fanatic
One reason why luxury-car buyers sometime switch to non-luxury makes is that non-luxury vehicles are getting more and more like luxury vehicles, with more and more equipment constantly being added. Not only that, but when I grew up back in the 60s and 70s, "luxury" vehicles (especially American ones) were usually larger, heavier, quieter-running, more powerful, softer-riding, and plusher inside than more mundane brands.....again, that is no longer the case. In fact, that started to go out the window with the new, downsized Cadillac Seville of 1975, which was essentially the size of other GM mid-sized cars.
Newer versions of the Chevy Malibu, Saturn Aura, Subaru Legacy/Outback, VW Passat/CC, Ford Taurus, Buick Enclave, and Buick LaCrosse are all examples of non-luxury-nameplate cars that, in some areas, are more impressive than some vehicles with higher-panache nameplates.
Newer versions of the Chevy Malibu, Saturn Aura, Subaru Legacy/Outback, VW Passat/CC, Ford Taurus, Buick Enclave, and Buick LaCrosse are all examples of non-luxury-nameplate cars that, in some areas, are more impressive than some vehicles with higher-panache nameplates.
12-24-09, 04:56 PM
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One reason why luxury-car buyers sometime switch to non-luxury makes is that non-luxury vehicles are getting more and more like luxury vehicles, with more and more equipment constantly being added. Not only that, but when I grew up back in the 60s and 70s, "luxury" vehicles (especially American ones) were usually larger, heavier, quieter-running, more powerful, softer-riding, and plusher inside than more mundane brands.....again, that is no longer the case. In fact, that started to go out the window with the new, downsized Cadillac Seville of 1975, which was essentially the size of other GM mid-sized cars.
Newer versions of the Chevy Malibu, Saturn Aura, Subaru Legacy/Outback, VW Passat/CC, Ford Taurus, Buick Enclave, and Buick LaCrosse are all examples of non-luxury-nameplate cars that, in some areas, are more impressive than some vehicles with higher-panache nameplates.
Newer versions of the Chevy Malibu, Saturn Aura, Subaru Legacy/Outback, VW Passat/CC, Ford Taurus, Buick Enclave, and Buick LaCrosse are all examples of non-luxury-nameplate cars that, in some areas, are more impressive than some vehicles with higher-panache nameplates.
12-24-09, 05:03 PM
#5
Like MMarshall says, the difference between luxury and high-end non-luxury has shrunk that it's hard to justify a some times $20K+ price difference for two comparibly equipped cars.
If you MUST buy new, then buying a loaded Accord is probably more price conscious than buying a fully loaded GS. So, why not just a preowned GS?
If you MUST buy new, then buying a loaded Accord is probably more price conscious than buying a fully loaded GS. So, why not just a preowned GS?
12-24-09, 05:12 PM
#6
Be ye careful when reading this kind of stuff.
I offer the following sentence from the article:
"At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent".
We all know the new TL was hit so hard with the ugly stick that it pushed customers away. So some folks bought the less hideous TSX instead. This is less about the economy and more about loyal Honda customers buying something they can live with.
Regarding the Genesis sedan, it is a flat out deal. Folks who are pinched but not down the tubes financially MB customers go with this. Another point is that the Genesis is a relatively new to market option. If you are not loyal to MB and are not looking for the driving dynamics, why not go Hyundai.
I offer the following sentence from the article:
"At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent".
We all know the new TL was hit so hard with the ugly stick that it pushed customers away. So some folks bought the less hideous TSX instead. This is less about the economy and more about loyal Honda customers buying something they can live with.
Regarding the Genesis sedan, it is a flat out deal. Folks who are pinched but not down the tubes financially MB customers go with this. Another point is that the Genesis is a relatively new to market option. If you are not loyal to MB and are not looking for the driving dynamics, why not go Hyundai.
12-24-09, 05:44 PM
#7
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I wouldn't exactly call my M3 luxury ... so I guess I did it too 
But really though, I think mmarshall nailed it; I can recall a few times when people of older generations than my own (not necesarilly old people, just people older than me) have said 'yea, well anything you buy now comes reasinably well equipped', and while that's not universally true, I agree that cars have come a long way in the last 20years.
But really though, I think mmarshall nailed it; I can recall a few times when people of older generations than my own (not necesarilly old people, just people older than me) have said 'yea, well anything you buy now comes reasinably well equipped', and while that's not universally true, I agree that cars have come a long way in the last 20years.
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12-24-09, 06:09 PM
#8
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Be ye careful when reading this kind of stuff.
I offer the following sentence from the article:
"At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent".
We all know the new TL was hit so hard with the ugly stick that it pushed customers away. So some folks bought the less hideous TSX instead. This is less about the economy and more about loyal Honda customers buying something they can live with.
Regarding the Genesis sedan, it is a flat out deal. Folks who are pinched but not down the tubes financially MB customers go with this. Another point is that the Genesis is a relatively new to market option. If you are not loyal to MB and are not looking for the driving dynamics, why not go Hyundai.
I offer the following sentence from the article:
"At his Acura dealerships, the $30,000 TSX compact sedan became his top-seller this year, displacing the TL midsize at $35,000. The trend is not just at his dealerships: Nationally, sales of the compact soared 24 percent in November, while the midsize plunged 35 percent".
We all know the new TL was hit so hard with the ugly stick that it pushed customers away. So some folks bought the less hideous TSX instead. This is less about the economy and more about loyal Honda customers buying something they can live with.
Regarding the Genesis sedan, it is a flat out deal. Folks who are pinched but not down the tubes financially MB customers go with this. Another point is that the Genesis is a relatively new to market option. If you are not loyal to MB and are not looking for the driving dynamics, why not go Hyundai.
Regarding the Genesis: I don't think that it's grabbing many wealthy buyers, but more so buyers that in the "boom" were buying homes and cars they couldn't afford. So now those buyers are trading in their luxury cars for a vehicle that has payments that they can deal with without giving up the luxuries they've become accustomed to.
Also the Genesis's current sales aren't anything to write home about, so there is no concrete proof that there is a huge move in the autosector toward the Genesis. If this argument was brought up about the Maxima I think it would be a more believable phenomena.
12-24-09, 06:48 PM
#9
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Thanks for posting. This writer though is telling us what was told a year ago. That and ONE MONTH does not make a trend for Buick. We have heard the same thing for other vehicles when they debut and the fact is Lexus, BMW, Benz are unaffected and the other brands are all fighting for the rest of the pie and killing each other off for it.
His Acura excuse is just that, an excuse. Anyone with a brain knows the TL's problems are vast, not just economy based.
His Acura excuse is just that, an excuse. Anyone with a brain knows the TL's problems are vast, not just economy based.
12-24-09, 07:00 PM
#10
Lexus Fanatic
ouch !! I agree that the TL is no looker but the interior is solid and it drives very nicely. Its not bad looking at all when they do the aero kit and available 19 with a grille swap. I have seen them with aftermarket 20's with the aero kit and I absolutely caught my eye. To each his own. I guess I am more Acura friendly since I currently have an 96 TL and will most likely be buying a 2010 MDX
12-24-09, 07:14 PM
#11
indeed... just look at high end toyotas, all of them are loaded through the roof with equipment that was several years ago only found in LS.
12-24-09, 08:53 PM
#12
My dad went from an ls400, to an es300, to an rx350, and now wants a subaru legacy? If you have saw the cars in the parking lot at his work last year compared to this year, a lot of people have left luxury brands and moved towards avalons, passats, an the like..the economy is effecting everyone
12-24-09, 09:54 PM
#13
Lexus Champion
Going from a 335i to an Aura, I'm one of them.
I'm not making any less money than before (actually a bit more)... I just changed my financial setup from leasing to cash buying. I guess the shifting economy has made me less certain of the future so I'd rather know I own my car and have minimized my debts.
I'm not making any less money than before (actually a bit more)... I just changed my financial setup from leasing to cash buying. I guess the shifting economy has made me less certain of the future so I'd rather know I own my car and have minimized my debts.
12-25-09, 01:15 AM
#14
Lexus Fanatic
I agree as well . I can afford a bit more than the 40-50k for the wifes SUV but I would rather stick with an Acura MDX or even Highlander ( if I can get a loaner) and not push it. I considered the Cayanne for a while. The wife loves it but with a baby on the way and the economy the way it is ( I am up as well) I would rather have the extra cash in the bank just in case.
