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Luxury vehicle is a marketing term for a vehicle that provides luxury — pleasant or desirable features beyond strict necessity at increased expense ( see: definition of luxury).

The term suggests a vehicle with greater equipment, performance, construction precision, comfort, design ingenuity, technological innovation, or features that convey brand image, cachet, status, or prestige—or any other discretionary feature or combination of features.

Automobile manufactures market specific makes and models that are targeted at particular socio-economic classes, and thus "social status came to be associated more with a particular vehicle than ownership of a car per se." Therefore, automakers differentiate among their product lines in "collusion" with the car-buying public. While a high price is the most frequent factor, it is "styling, engineering, and even public opinion which cars had the highest and lowest status associated with them."

Every era in automobile history has had "a group of car marques and models that have been expensive to purchase, due to their alleged superiority of their design and engineering. Aimed at wealthy buyers, such automobiles might be generically be termed luxury cars." This term is also used for unique vehicles produced during "an era when luxury was individualistic consideration, and coachwork could be tailored to an owner like a bespoke suit." Although there is considerable literature about specific marques, there is a lack of systematic and scholarly work that "analyzes the luxury car phenomenon itself."

In contemporary usage, the term may be applied to any vehicle type— including sedan, coupe, hatchback, station wagon, and convertible body styles, as well as to minivans, crossover, or sport utility vehicles and to any size vehicle, from small to large—in any price range.

Though widely used, the term luxury is broad and highly variable. It is a perceptual, conditional and subjective attribute and may be understood differently by different people: "What is a luxury car to some... may be 'ordinary' to others."

Global references

According to the European Commissionmarker, the "luxury vehicle" segment is classified as F-segment. However, the boundaries between the traditional segments are increasingly becoming blurred and diluted as features once exclusive to luxury vehicles become standard equipment on even small cars.

  • ACRISS is a code system used by many car rental companies in the US for classifying vehicles (but not brands or marques). The system includes Luxury and Premium categories.
  • Australia In Australia, for taxation purposes a luxury car is defined as a passenger car whose value exceeds a certain threshold (see: Luxury Car Tax).
  • Germany: In Germany the term "Upper class" ( ) is used.
  • Russia: Russian markets use the term "representative class vehicle" ( , also translated as "luxury vehicle").


Characteristics

Luxury cars tend to offer a higher degree of comfort than their mainstream counterparts, common amenities include genuine leather upholstery and polished "woodgrain-look" dashboards. Compared to mainstream vehicles, luxury cars have traditionally emphasized comfort and safety, while contemporary luxury cars also offer higher performance and better handling. Luxury vehicles are also a status symbol for conspicuous consumption.

Forbes noted that the reputation of luxury marques enables them to continually introduce many new safety technologies and comfort amenities, such as anti-lock brakes, electronic stability control and DVD entertainment systems, before they trickle down to mass market cars. Numerous "smart car" features are largely only found on luxury cars as of 2009.

The rear-wheel drive with longitudinal engines (FR) is a common layout of luxury cars. European marques like Mercedes-Benz, BMW, and Jaguar have almost never adopted front-wheel drive and retained a lineup mostly or entirely made up of FR cars. Japanese brands such as Lexus and Infiniti also have predominantly FR lineups. The FR layout, while more expensive than the FF, has been retained by these luxury manufacturers as it allows for higher performance engines (particularly the straight-6, V8, and other engine configurations with more cylinders), better handling, and a smoother ride.

American manufacturers also largely followed the FR for their luxury brands (as well as mass-market cars of the time). However, due to the Arab Oil Embargo of 1973 and the 1979 fuel crises, began eliminating their FR platforms in favor of the more economical front wheel drive transverse engine layout (FF). Chrysler went 100% FF by 1990 and GM's Cadillac and Buick brands for the US were entirely FF by 1997. One of the few notable holdouts was Ford's Lincoln Town Car and Lincoln LS. Cadillac will be entirely FR (with four-wheel drive available as an option on several models) by 2010. Chrysler returned its full-size cars to this layout with the Chrysler 300. Ford's Lincoln retained the longtime FR platform for the Town Car, intended for use as a limousine and chauffeured car, but newer offerings such as the MKZ and MKS will use newer FF platforms shared with mainstream Ford vehicles, with all-wheel drive as an option.

History and sales

In the United States luxury market, Cadillac and Lincoln had been long the best-selling and second best-selling luxury brands until 1998, when they had been overtaken by Japanese and German brands. Since the 2000s, with the Cadillac CTS, the marque has seen a resurgence in sales and brand value. Ford's Lincoln, which had seen sales fall as a result of an aging lineup, has attempted to return that luxury marque to competitiveness, by releasing new models such as the Lincoln MKS, as well as divesting itself of its other Premier Automotive Group brands. Mercedes-Benz and BMW were the top-selling luxury import until 1991, when they were overtaken by Lexus. Since 2000, Lexus has been the number-one-selling luxury car marque in the U.S., holding that title ever since.

Since the 1980s, a host of new manufacturers have entered the luxury market to challenge the traditional players. The three major Japanese auto manufacturers, Honda, Toyota, and Nissan, created their respective luxury brands particularly for the US. As a result of voluntary export restraint imposed in 1981, these manufacturers were limited to a number of vehicles they could export. While these companies did somewhat sidestep this by establishing US production facilities for mass market vehicles, their home factories soon begun producing higher-priced cars as they carried a greater profit margin per car. Acura was launched in 1986, while Lexus and Infiniti were unveiled in 1989. By 1992, these three divisions had sales of over US $3.5 billion, using lower prices and innovation to steal market share from both domestic (Cadillac, Lincoln) and the European (Mercedes-Benz, Volvo, Audi, BMW and Jaguar) luxury car makers. Hyundai had recently released the Genesis and plans to launch the Equus, hoping to repeat the same strategy of undercutting their established competitors.

The Late-2000s recession was the first time since the Great Depression of the 1930s that the luxury car market suffered considerably, something not seen in previous economic downturns. Many such customers had seen their net worth decline following the collapse in financial markets and real-estate values. For instance, some of the steepest dropoffs had come at the high end, including the BMW 7 Series and Rolls Royce Phantom, and Mercedes-Benz had unexpectedly dropped starting price of its all-new 2010 E-Class. The unusually sharp decline in luxury car sales have led observers to believe that there is a fundamental shift and reshaping of the luxury automotive market, with one industry officials suggesting that the marques no longer command the premiums that they used to, and another saying that conspicuous consumption was no longer attractive in poor economic conditions.
 As well, mainstream brands have been able to offer anemities and devices such as leather, wood, and anti-lock brakes, previously found only on luxury cars, as the costs decline.


However, luxury vehicle sales have not collapsed as much as their non-luxury counterparts. Luxury vehicle marques generally benefited from financially healthier dealerships, better leasing and certified pre-owned programs and loyal customers, so sales are expected to rebound more quickly than mass market cars.
Others note that there is growing interest in luxury vehicles from emerging markets such as China and Russia.
 As well, the entry-level luxury segment has been very competitive, and there has been price-overlapping with well-equipped non-luxury cars. For instance, in Canada, several luxury manufacturers set sales records in August 2009, due mostly to aggressive incentives on entry-level luxury vehicles. In September 2009, BMW, Mercedes-Benz, Lexus and Audi all saw their Canadian sales increase by more than 10 per cent compared to a year earlier, despite overall Canadian auto sales being down 3.5 per cent compared to September 2008. The head of Mercedes-Benz Canada suggested that the brand "has been able to attract 'middle-class' consumers even during the recession because of the sense that owning a Mercedes comes with 'membership in a club'." BMW Canada's chief said luxury cars continued to be attractive, "I think due to new product offensives and due to new design and due to the fact that we are the benchmark in all areas when it comes to fuel efficiency... that together stimulates a lot of the market".


See also



References

  1. "The Original Luxury Minivan Adds Fresh Ideas for 2008" The Auto Channel News 2007-08-06, retrieved on 2009-09-29.
  2. Mitchell, Jacqueline "Nine Minivans You'll Beg To Drive" Forbes 2008-01-22, retrieved on 2009-09-29.
  3. http://ec.europa.eu/competition/mergers/cases/decisions/m1406_en.pdf
  4. http://ec.europa.eu/competition/mergers/cases/decisions/m5219_20080925_20310_en.pdf
  5. "Luxury Car Tax" Australian Customs Notice - 2001/58, 1st September 2001, retrieved on 24 May 2008.
  6. Bills Digest No. 159 1998-99, A New Tax System (Luxury Car Tax) Bill 1999, retrieved on 24 May 2008
  7. Car of the Year Russia
  8. High-End and Mid-level Luxury Definition
  9. U.S. luxury car manufacturers are rethinking rear wheel drive.(Auto Weekend) | Article from The Washington Times | HighBeam Research
  10. Author: Spero News. "[Lincoln Town Car wins stay of execution]" Publication: Spero News. Article Date: 9/19/06. Date Retrieved: 9/22/06. [1]
  11. Detnews.com | This article is no longer available online | detnews.com | The Detroit News
  12. van Loon, Jeremy (2007-05-04). "BMW Luxury Lead Threatened by Lexus, Stagnant Margins." Bloomberg. Retrieved on 2007-05-06.
  13. General Motors - A Corporate Governance Case Study



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