Though sales of the costliest rides on the road tend to rise and fall nominally with the economic tides, it’s not that the wealthy can’t afford a Porsche 911 or Lexus LS 460 in a downturn, but they often decide it’s not a good time to park that shiny new model in the front row of the parking lot at a time when employees are being laid off. Rather, it’s the point of entry into the luxury vehicle market that speaks volumes about the nation’s buying power.
Not only is that segment of the market continuing to gain steam, it’s becoming increasingly competitive. According to an analysis of registration data conducted by IHS Automotive in Southfield, Mich., recent additions like the Acura ILX, Cadillac ATS and Mercedes-Benz CLA are successfully serving as “gateways” into the luxury segment for buyers who previously shopped among mainstream brands. The leaders in this regard are actually drawing the majority of their sales as conquests from non-luxury nameplates.
“The fact that many luxury models are pulling more than half of their conquests from non-luxury makes suggests the line between luxury and non-luxury is blurry at best,” says IHS Automotive Solutions consultant Tom Libby. “As more luxury makes join Mercedes-Benz, BMW and Audi in the entry-level arena, and as mainstream makes continue to offer sophisticated products at the top of their portfolios, the division between luxury and non-luxury may fade even more.”
We’re featuring the 10 luxury vehicles with the highest percentage of conquests from mainstream segments in the accompanying slide show. Nine of them are entry-level models based on price and/or size, with the exception being the Infiniti JX/QX60 midsize crossover SUV (it was renamed QX60 for 2014), which resides in the brand’s lineup above the compact EX/QX50 model. “This situation speaks to the relative weakness of the EX, which will soon be replaced,” Libby explains. Perhaps ironically, topping the list is the recently discontinued Volvo C70 convertible, which drew 68 percent of its otherwise lackluster volume (1,769 units sold during calendar year 2013) from non-luxury customers.
In Pictures: 10 Luxury Cars With The Most Non-Luxury Conquest Buyers.
To be sure the strengthening economy has been fueling the recent boom in new car sales, with upscale compact cars and crossovers becoming especially popular among empty nesters and up-and-comers that otherwise eschew larger models but don’t want to scrimp on comfort and convenience features.
Likewise, astute consumers are no doubt working the math and finding that in many cases, it’s nearly as costly to choose a well equipped mainstream model than a similar vehicle from a bona fide luxury brand. For example, a Volkswagen CC midsize sedan in its base trim level is sticker priced at $32,495, while its upscale equivalent, the Audi A4, starts at $33,800.
Not only do those buying bona fide luxury cars enjoy bragging rights with regard to brand cache, they’re afforded added benefits of ownership. These often include longer warranties and/or free scheduled maintenance programs and upgraded treatment at the service department, often with complementary loaner cars, waiting rooms stocked with espresso bars and other amenities and cars that are returned to customers washed, vacuumed and with the fluids topped off.
This is why Hyundai was more or less forced to develop a unique buying and ownership experience when it launched its flagship Equus sedan, which tops out at around $70,000. Rather than require its most affluent customers to rub elbows with common Accent and Elantra owners at the dealership, a so-called “Product Champion” will deliver an Equus to a prospective buyer’s home or office for a personalized walk-around and test drive. Owners enjoy complementary maintenance for three-years/36,000 miles, with vehicles picked up at their home or business when service is needed and a complimentary loaner left behind in the interim.
Kia would be mindful to establish a similar program with its recently introduced $60,000 K900 flagship sedan to help stimulate sales of what is otherwise a mainstream-branded model that resides in the sweet spot among certified luxury cars. Likewise Volkswagen, should it plan to re-introduce its top Phaeton in the U.S. as has been suggested (it was priced at between $67,000 and $102,000 when last offered – unsuccessfully – in 2006), would be well served to follow Hyundai’s lead in this regard to avoid another marketing debacle.
