I agree with you halfway on this one. For the younger luxury buyers, i am guessing the majority will expect sprightly performance. But as nature would dictate, the older population usually has more wealth (more time to earn more money) and thus make up the majority of luxury car buyers. Many people bash Lexus and Buick as old people cars, but in reality, I'd be willing to bet that the average age of luxury car buyers, regardless of brand, is significantly higher than non luxury marques. Nothing wrong with that, just the fact that older people usually have more money.

The older population probably will not care as much about performance, and that demographic is the most important to any high end carmaker.

With the way gas prices are, it is likely that small NA engines will appear in luxury cars. The big ones will remain, but will play an ever decreasing role in sales. A small engine does not necessarily mean a decontented product, as features and content can still be added into a small engine car.

 

Jaguar is still considered a luxury brand (especially with their price points) and they just dropped a 4 cylinder turbo into the XF. After reading the reviews, I wouldn't buy one, but since they are now $6k less than the 6 cylinder XFs I'm sure they will bring in new buyers.

 

I agree with everything you're saying (including your conclusions), but I would like to take exception to your "the older population ... is the most important to any high end carmaker". While yes, they have the money and they're important, all carmakers see the importance of catering to the younger market. And that's because it takes time to build brand loyalty, while also taking advantage of the fact that a 30-something will probably buy 3x as many cars before they pass on than a 60-something.

 

And this is absolutely true. If anything, these carmakers are working hard to appeal to younger buyers at the risk of alienating older, more established buyers. They want to get their hands on that young, 30 year old upwardly mobile person that will buy a CT, then an IS, then a GS, then an LS.

 

One of the reasons why Lexus & other manufacturers has appealed to younger buyers is, not because they have money, but because they have access to credit. The access to credit means Lexus/Toyota gets paid in full by a financial institution the buyer got the loan from, but if the buyers miss payments or no longer can afford the vehicle, it's up to the banks to repossess what they're owed. All credit can be traced back to a handful of major financial institutions, AIG, Citi, etc.

Older people are more cautious with their money as they're not looking to blow their retirement funds on a car, nor take out huge amount of loans for a car, not as readily as the younger generations. For the younger generation, the mentality is to live life on a day to day basis, even pay cheque to pay cheque, why, because they think they have the next 50 years to work & pay off their loans & mortgages. Modern day slavery to the banking system for non essential wants...

It's alarming to know that majority of people who are buying new cars, pay little to zero downpayments & finance at 5+ years. It's even worse for people with bad credit with interest being more than double that of folks with decent credit. If a person cannot put at least 25% downpayment of the cost of the car & finance for less than 4 years, then they are beyond their means.

 

Great points. Both make a lot of sense. Unfortunately with life as we know it, people age. The young gun who bought that CT will probably end up in something much fluffier and smoother when they get to a certain age. And at the end of the road they will turn into an elderly who doesn't care about performance.

At the same time, the fact that car makers are downsizing engines is a two-prong approach for future success.

1. Most immediate is the fuel economy bonuses of a little engine.
2. Regarding what you guys said about younger buyers entering a luxury brand for the first time, a smal engine also leads to a small price tag. The final result is a lower point of entry into a status symbol. How many CTs do you think Lexus would sell equipped with a V6 running 35k base? Versus right now at I4 hybrid 31k base. Sure it is only a 4k diff in entry but for many younger buyers, it is important. This is the main reason why small engines outsell the big ones in many cases. Enthusiasts will care about raging horsepower, but the majority of the population is not very car-oriented, and tends to just buy the car for the badging.
This is also perfect reasoning as to why you see so many elderly driving non-luxury Japanese makes (especially Avalons). They want their remaining driving experience to be as trouble free as possible. They could easily afford something more ostentatious but, it is never the most economical thing to do. As for the ones who still drive 80s and 90s Cadillacs/Buicks/Lincolns, they just love the good ol' days!

 

Actually, Lexus buyers have some of the highest average credit scores of any carmaker.

They aren't targeting younger people because they have access to credit, its because they want the opportunity to sell them a variety of cars throughout their lives, and its an opportunity to establish their loyalty with their own brand. Thats why advertisers target the 18-45 demographic so heavily throughout many industries.

Lets not make this a debate about whether people should finance cars or whatever.

 

Interesting point on Lexus buyers

I agree with what you're saying, show the younger buyers the vehicles & how it performs/aesthetics/etc, starting at a lower price point, if they like the product, they will be hooked on to upgrade to a better product within the same company. Brand loyalty aka returning customers, as well as word of mouth advertising. What you've mentioned & what I've iterated, are a couple of reasons out of many, why Lexus would attract the younger demographics

Pardon for my rambling on.

 

You guys can't forget CAFE fuel economy standards that require an S-class sized vehicle to go from 21 mpg today to 34 mpg in 2025. I figure we've only got about 7 or 8 years of drivable cars. From then on, it's golf carts for all of us. So don't put off buying performance - you'll never get another chance.

 

FYI according to Motor Trend.. Mercedes is dropping the v-8 eclass non amg for a boosted 6. They will offer two v-6s and one will be more powerful

 

I, for one, actually can't wait to see the day when we are going to get more impressive MPG numbers. I'm tired of hurting badly at the gas pump every time I have to fill up.

But I can't say I won't miss the days of screaming V10s a la LFA and Porsche Carrera GT. Gotta be thankful for the fact that cars like the CT and ESh exist. Their high MPG numbers help give a little bit of wiggle room for gas guzzling LFAs that are lucky enough to see production.

This reminds me of an article on CarandDriver, where they talk about how enthusiasts should be in love with the Chevy Volt because they allow future Corvettes to see production.

 

All this discussion about downsizing engines due to regulations brings one thought to mind.

The advantage Lexus has over BMW and Mercedes is that Lexus can depend on cars like the Prius and Corolla to lower Toyota's overall fleet emissions.

BMW has only itself, so cue the sudden proliferation of 1 series and 2 series sedans/coupes/hatchbacks and the X1 SUV in a desperate attempt to meet CAFE. As well as the maddeningly intrusive stop-start feature in the latest German cars.

Make no mistake. Force induction in the Germans is primarily an emissions/fuel economy measure mandated by increasingly strict regulations AND IS NOT a performance-oriented decision, no matter how they try to spin it.

Everything else that BMW/ Audi/ MB are doing (8 speed gearbox, overly complex FI engines with more working parts and complicated software and correspondingly less engine/electrical reliability) is an attempt to mitigate the drawbacks of FI from a driver-oriented standpoint. Some succeed fairly well (Audi A6 3.0T, MB v8 TT). some less so (BMW F10,F30 ). ALL suffer more from worsened reliability as a result.

That said, Lexus, of course, does it own share of downsizing engines for regulatory purposes but approaches it via adding hybrid tech. From my experiences with the Lexus Hybrid drivetrain in the GS450h F-Sport, they've done pretty well in terms of immediacy and smoothness of throttle response. Fortunately, the hybrid drivetrains in Toyota and Lexus seem to be bulletproof so far.

 

Excellent post! Clear thesis, solid complex discussion, persuasive examples based on experience, and directly on topic of future Lexus vehicles. Nice job. I LOVE this forum!

 

FYI 2015 benz is getting rid of the tt v8 for the E class(e550) and replacing it with a tt v6(350hp/torque) and called the E400.

it will definitely be underrated though, since the NA v6 makes 300 h p already(although its a suspect 300hp, that car is SLOW compared to our car)

im guessing the v6 tt will do about 380-400 to the crank.