car pricing split?
#1
Lexus Fanatic
Thread Starter
iTrader: (20)
car pricing split?
while cars still come at all price points, reading about the new NSX going up over $200K and the LC rumored at $150K, and reading the rants that it's too much i began thinking about pricing in general.
as our society 'splits' wealth more and more, with the vast majority of americans struggling to pay bills, raise families, and, live the 'american dream', and the rest having STAGGERING wealth, i feel that cars are tending to do this more also, with seemingly more and more 'value' models, and also more and more cars with irrelevant 'starting' prices and endless options driving out the door prices into the stratosphere. but for those with huge incomes or with accountants using the car leases as write-offs, the cost isn't that big a deal, and car makes know it, so they're likely to keep bringing out models at HUGE prices.
your thoughts?
as our society 'splits' wealth more and more, with the vast majority of americans struggling to pay bills, raise families, and, live the 'american dream', and the rest having STAGGERING wealth, i feel that cars are tending to do this more also, with seemingly more and more 'value' models, and also more and more cars with irrelevant 'starting' prices and endless options driving out the door prices into the stratosphere. but for those with huge incomes or with accountants using the car leases as write-offs, the cost isn't that big a deal, and car makes know it, so they're likely to keep bringing out models at HUGE prices.
your thoughts?
#2
Car Chat Moderator
iTrader: (4)
I just went to a Porsche dealer ship website, and their first page are filled with 200k+ 911s and panamera turbos, didn't know Porsche are getting so expensive nowadays :/ I thought average Porsche are around 100-150, only special few are over 200+! Guess people who can afford them don't care about 50k more.
I agree the higher ends cars prices are getting out of hand that only very very few people could afford them.
I agree the higher ends cars prices are getting out of hand that only very very few people could afford them.
#3
Lexus Fanatic
Thread Starter
iTrader: (20)
it's pretty incredible to think bugatti sold 450 veyrons at a million+ a piece. i suspect those that bought them didn't think twice about the money.
there is also an aspirational market who are ok leasing a car for $1000-$1500/mo. figuring that $15-20K a year makes them look good at the country club and is obviously a nice ride! but again, the vast majority of people could not spend that kind of money.
#4
exclusive matchup
iTrader: (4)
i think that's very true, the market is being split up pretty good and the gap is widening just like how the economy is.
the interesting thing is even for luxury brands, they are splitting up as well in order to hold the ultra rich while trying to scoop up as many "low end luxury" market as possible. just like how we see all the 1 series, cla, ct, a3. these companies realize that they cannot survive if they just hang on to the really rich ones.
10 years ago with lexus, the IS was a 30k car and the LS was a 60k car. now the CT is 30k and the LS is 90k and hybrid over 120k. that's a much wider gap than before.
affording the car is one thing, to me there is still the value part. i think it has a lot to do with the fact that i went through the old era (early 2000s) so now i find it harder and harder to justify the gap. me being able to afford say the s class, doesn't make me feel i am getting enough value out of it. that's the problem i am facing.
funny you brought up veyron, indeed i am pretty sure most owners don't feel anything buying the car. i still remember one survey said that on avg veyron owners have around 80 cars. most of us don't even have 8
the interesting thing is even for luxury brands, they are splitting up as well in order to hold the ultra rich while trying to scoop up as many "low end luxury" market as possible. just like how we see all the 1 series, cla, ct, a3. these companies realize that they cannot survive if they just hang on to the really rich ones.
10 years ago with lexus, the IS was a 30k car and the LS was a 60k car. now the CT is 30k and the LS is 90k and hybrid over 120k. that's a much wider gap than before.
affording the car is one thing, to me there is still the value part. i think it has a lot to do with the fact that i went through the old era (early 2000s) so now i find it harder and harder to justify the gap. me being able to afford say the s class, doesn't make me feel i am getting enough value out of it. that's the problem i am facing.
funny you brought up veyron, indeed i am pretty sure most owners don't feel anything buying the car. i still remember one survey said that on avg veyron owners have around 80 cars. most of us don't even have 8
#5
Lexus Test Driver
I'm not sure I buy the "wealth chasm" argument because the aspirational market is the biggest one out there. I recall a report from not too long ago that around 60% of S-Class and 7-Series buyers lease. Given the type of people I know who drive those types of cars, that was actually lower that I expected. But still, that should tell you everything you need to know.
I always was a bit skeptical about "luxury" cars and brands especially after a pretty lousy experience with my first foray into the segment - a C-Class that was not particularly luxurious and even less reliable. It took Lexus to really get me into it the segment. And even now, I'm really not sure what direction I'm going to go in. For example, the GS-F doesn't represent particularly good value to me.
The way I look at it, many people buy an A/CLA/whatever because they want the cachet of a MB logo on the hood and will spend as little money as possible to get it. It's not too different to how many people buy an S-Class because they want the cachet of having the "top" MB, hence the existence of things like an S320. If anything, it's the downmarket "luxury" that widens the gap as it makes cars more accessible and then people who just want the brand cachet follow the trend downmarket too. Same as how the California cannibalized 458 sales.
I always was a bit skeptical about "luxury" cars and brands especially after a pretty lousy experience with my first foray into the segment - a C-Class that was not particularly luxurious and even less reliable. It took Lexus to really get me into it the segment. And even now, I'm really not sure what direction I'm going to go in. For example, the GS-F doesn't represent particularly good value to me.
The way I look at it, many people buy an A/CLA/whatever because they want the cachet of a MB logo on the hood and will spend as little money as possible to get it. It's not too different to how many people buy an S-Class because they want the cachet of having the "top" MB, hence the existence of things like an S320. If anything, it's the downmarket "luxury" that widens the gap as it makes cars more accessible and then people who just want the brand cachet follow the trend downmarket too. Same as how the California cannibalized 458 sales.
#6
Lexus Fanatic
Thread Starter
iTrader: (20)
whether leased or purchased, by decidedly wealthy people or those 'doing well' (or posers, lol), i've no doubt mb makes a load of money on the s-class.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
i bet in 5 years even hyundai/kia will have a vehicle well into 6 figures.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
i bet in 5 years even hyundai/kia will have a vehicle well into 6 figures.
#7
I completely agree
Wher the big boys have been really smart is in putting some down market models like the 1 series to have something at a price point that many folks can touch and then extending upward.
I remember being shocked when I configured a 6 series grand coupe a couple of years ago and it approached $150K
One of my first professors in B school said there is a lot of money to be made if companies give me what I want.
The high end rides with lots of personalization opportunities is just what he was talking about.
Wher the big boys have been really smart is in putting some down market models like the 1 series to have something at a price point that many folks can touch and then extending upward.
I remember being shocked when I configured a 6 series grand coupe a couple of years ago and it approached $150K
One of my first professors in B school said there is a lot of money to be made if companies give me what I want.
The high end rides with lots of personalization opportunities is just what he was talking about.
whether leased or purchased, by decidedly wealthy people or those 'doing well' (or posers, lol), i've no doubt mb makes a load of money on the s-class.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
i bet in 5 years even hyundai/kia will have a vehicle well into 6 figures.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
i bet in 5 years even hyundai/kia will have a vehicle well into 6 figures.
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#8
Lexus Champion
iTrader: (3)
while cars still come at all price points, reading about the new NSX going up over $200K and the LC rumored at $150K, and reading the rants that it's too much i began thinking about pricing in general.
as our society 'splits' wealth more and more, with the vast majority of americans struggling to pay bills, raise families, and, live the 'american dream', and the rest having STAGGERING wealth, i feel that cars are tending to do this more also, with seemingly more and more 'value' models, and also more and more cars with irrelevant 'starting' prices and endless options driving out the door prices into the stratosphere. but for those with huge incomes or with accountants using the car leases as write-offs, the cost isn't that big a deal, and car makes know it, so they're likely to keep bringing out models at HUGE prices.
your thoughts?
as our society 'splits' wealth more and more, with the vast majority of americans struggling to pay bills, raise families, and, live the 'american dream', and the rest having STAGGERING wealth, i feel that cars are tending to do this more also, with seemingly more and more 'value' models, and also more and more cars with irrelevant 'starting' prices and endless options driving out the door prices into the stratosphere. but for those with huge incomes or with accountants using the car leases as write-offs, the cost isn't that big a deal, and car makes know it, so they're likely to keep bringing out models at HUGE prices.
your thoughts?
Sure there are car that are extremely expensive, but there were always those. Its just today there are more of those extremely expensive models because we have more wealthy people.
But for an average Joe things are pretty good as well. When I came to USA in 1993, from my observation most cars in NYC were horrible pieces of junk, with red tape over broken tail lights, dents, peeling paint, etc. Today its a rare sight to see a beat up car anywhere in NYC, and most middle class neighborhoods are filled with premium cars.
Thanks, Obama!
#9
Lexus Fanatic
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
(BTW, when he bought that Forester, he had asked my recommendation for an ideal inexpensive winter car...he's been satisfied with it ever since, and seemed to avoid the head-gasket problems many older N/A 2.5L Subies had)
Last edited by mmarshall; 12-22-15 at 06:17 PM.
#10
Lexus Fanatic
You're probably already aware of this, but, if not, you'd be surprised at the number of college professors driving either Volvos or a Toyota Prius. Both have developed stereotypes as school-marm vehicles.
#11
Car Chat Moderator
iTrader: (4)
I know a lot of people that lease high end cars simply because they want to drive new cars every 1-3 years, and don't want to deal with resale of such car, and spending 15k-25k a year for it. Also tax advantage is added benefit. This is complete opposite with people leasing lower end luxury cars, I know plenty of my clients getting 320i, CLA250, C300, A3/A4 because they want the badge, and numbers of them admitted to me that's exactly what they doing. They went and bought the base model with lowest payment, so they are now driving MB/BMW/Audi/Lexus.
On the other hand, all those ultra high dollar models bring glory to the brand, making people getting the cheaper models feel better
On the other hand, all those ultra high dollar models bring glory to the brand, making people getting the cheaper models feel better
#12
Lexus Fanatic
In the U.S., though (I'm not sure about tax laws in other countries), one can usually only deduct the lease-payments if the vehicle is regularly used in business or on the job. If the vehicle is used in charity work or as transportation getting to and from charity work, 14 cents a mile for operating costs can be deducted on Federal taxes...but that applies to any vehicle, not just leased ones.
#13
Lexus Test Driver
I don't mind some of these crazy new high prices, but I feel the car has to have qualities to earn that price. Sometimes I think auto brands are just making cars and slapping on a high tag just using the logic people will buy it anyway because there are a few others out there who are selling some expensive ones.
One good example is the Acura RLX. For what you see and get, the price should be in the low $40's. I fear the NSX has some of that mentality, but I hope I'm wrong.
As for the new LC, maybe many (including myself) were expecting a SC replacement, which left us in the $55k range. If I were Lexus, I would have continued on with the LFA and brought in a more affordable SC. The LFA ran way too short of a life, where demand was still heavy. Now they have a problem not having an expensive/halo car. Pricing things high like the LC and SC, to fill in some of that gap, is not a legit way of branding your lineup.
One good example is the Acura RLX. For what you see and get, the price should be in the low $40's. I fear the NSX has some of that mentality, but I hope I'm wrong.
As for the new LC, maybe many (including myself) were expecting a SC replacement, which left us in the $55k range. If I were Lexus, I would have continued on with the LFA and brought in a more affordable SC. The LFA ran way too short of a life, where demand was still heavy. Now they have a problem not having an expensive/halo car. Pricing things high like the LC and SC, to fill in some of that gap, is not a legit way of branding your lineup.
#14
MM,
I am overly familiar with the millionaire next door approach where those who have dough do not up their consumption habits in line with their increases in income/wealth.
I am just saying that a lot of folks with coin have been jonesing for higher end product and have been happy to fork over for it.
In 91 an NSX cost more than my annual salary. The new one will only be about 25% of our 2016 household income, which points again to the income disparity point in the original post.
I am overly familiar with the millionaire next door approach where those who have dough do not up their consumption habits in line with their increases in income/wealth.
I am just saying that a lot of folks with coin have been jonesing for higher end product and have been happy to fork over for it.
In 91 an NSX cost more than my annual salary. The new one will only be about 25% of our 2016 household income, which points again to the income disparity point in the original post.
I don't mind some of these crazy new high prices, but I feel the car has to have qualities to earn that price. Sometimes I think auto brands are just making cars and slapping on a high tag just using the logic people will buy it anyway because there are a few others out there who are selling some expensive ones.
One good example is the Acura RLX. For what you see and get, the price should be in the low $40's. I fear the NSX has some of that mentality, but I hope I'm wrong.
As for the new LC, maybe many (including myself) were expecting a SC replacement, which left us in the $55k range. If I were Lexus, I would have continued on with the LFA and brought in a more affordable SC. The LFA ran way too short of a life, where demand was still heavy. Now they have a problem not having an expensive/halo car. Pricing things high like the LC and SC, to fill in some of that gap, is not a legit way of branding your lineup.
One good example is the Acura RLX. For what you see and get, the price should be in the low $40's. I fear the NSX has some of that mentality, but I hope I'm wrong.
As for the new LC, maybe many (including myself) were expecting a SC replacement, which left us in the $55k range. If I were Lexus, I would have continued on with the LFA and brought in a more affordable SC. The LFA ran way too short of a life, where demand was still heavy. Now they have a problem not having an expensive/halo car. Pricing things high like the LC and SC, to fill in some of that gap, is not a legit way of branding your lineup.
#15
Lexus Test Driver
whether leased or purchased, by decidedly wealthy people or those 'doing well' (or posers, lol), i've no doubt mb makes a load of money on the s-class.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
my point is, since higher end vehicles are VERY profitable, and since wealth is now more 'split' than ever (with the middle class pretty much disappearing), i think car makers are going to offer more high end and personalizable vehicles than ever.
BTW, I was able to find a blog post referencing the study (from 2011) than I read - it reports 57% lease rate on the S-Class and a staggering 66% on the BMW 750. Lexus LS was down at 40%, to put things in perspective. Either way it blows my mind that so many people are leasing cars. Absurd to me really.
http://blog.ihs.com/dont-believe-everything-you-see
I'd think that example would demonstrate lack of systemic income inequality.
Last edited by gengar; 12-23-15 at 02:40 PM.