Luxury cars have become terribly common, potentially expensive

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Thread: Luxury cars have become terribly common, potentially expensive

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    Luxury cars have become terribly common, potentially expensive

    http://www.theage.com.au/business/co...26-gh9v6e.html

    The Age
    Business News

    Michael Pascoe
    BusinessDay contributing editor
    .
    It seems the "C" in Mercedes-Benz C class sedan stands for "common": there are more of them being sold this year than Ford Falcons. Include the C class coupes and there are more than Falcons and Toyota Aurions combined.

    That says as much about the decline of the Aussie family car as the rise of Mercedes' Car of the Year, but Mercedes overall has lost any claim of being an exclusive brand. More Berlin taxis than Hondas are being driven out of our showrooms.

    It's not just Mercedes. Australian sales of the obvious German rivals, BMW and Audi, are booming, too. That's partly thanks to cheaper entry-level models, but also to lower interest rates and fuel prices promoting an extraordinary willingness to splurge on expensive new cars when consumers are supposed to lack confidence and the economy is soft.


    C-class models like Mercedes-Benz's C200 are now more commonly bought than much humbler vehicles like the Toyota Aurion or Ford Falcon. Photo: Mark Bean

    I'll come to a problem building in that for many buyers – and an opportunity for those who are more patient – but first marvel at our new-found indulgence in flashy metal.

    Mercedes passenger car sales in the first third of the year are up by 21 per cent, BMW 16 per cent, Audi 14. Total Mercedes vehicle sales, including SUVs and vans, were 11,474 units, up 23 per cent.

    But that sort of sales growth is stuck in the slow lane compared with the supercars fanging it down the centre line. The fastest growing segment of the Australian vehicle market is "sports cars over $200,000". Dealers sold 527 vehicles in this category, 30 per cent more than last year.


    The breakdown of the Federal Chamber of Automotive Industries figures for the first four months of the year confirm new vehicle sales are going gangbusters, on track for a record high – and that's before any rush for cheap utes pre-June 30.

    Who cares about utes though when the most expensive cars are growing fastest? In the first four months, Lamborghini sales were up 820 per cent to 46 units. Ferrari sales, 64 of them, were up 107 per cent. Maserati sales quadrupled to 177.

    Porsche 911s are a bit pedestrian in this company, but April was a good month for them as 43 were sold, taking the year-to-date total to 148 – up a modest 7 per cent.

    While 911 sales growth wasn't speedy, Porsche overall sold 1293 of its V-dubs-on-steroids, 62 per cent more than this time last year. As an exclusivity measure, new Porsche 911s this year are more common than new VW Beetles (78 sold) and Golf cabriolets (114).

    By stark comparison, there have been 2029 Falcons bought in the first four months and just 956 Aurions. The increasingly-common Mercedes C class? Try 3264 (the new model up 102 per cent on the old) plus 731 coupes.

    Sales of all Merc passenger cars were up 21 per cent to 8126. Sales of all Ford passenger cars were down 41 per cent to 7022. The three-pointed star is leaving the blue oval in the dust.

    Sales of all locally manufactured vehicles were down 9 per cent to 28,995 – only 8 per cent of the 359,250 total sales..




    If the industry beats the 2013 sales record of 1.136 million, Australians will have purchased nearly 5.5 million new vehicles in five years – rather amazing for a mature market with a population that averaged about 23 million people over that period.
    Last edited by BBDOS CV8; 05-26-2015 at 11:40 PM.

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    Re: Luxury cars have become terribly common, potentially expensive

    This is a highlight and illustration of the pitfalls for Ford and Holden. With no premium-configuration product (hi-performance, RWD with V8 or turbo six) and nothing other than rehashed world cars of no particular disctinction they are going to sink in Australia.

    What are people buying instead of Falcon and Commodore? BMW and Mercedes - not midsize nosedraggers, which is declining even more, Aurion is a Camry V6 anwhere else, it sold around 1000 per month at a peak - down to 25% of that. More decline than Commodore sales.

    I have the lastest leasing info from my work. A BMW 2 M-sport convertible 120 is retail priced roughly double a SS-V Redline Commodore with 6.0 and auto

    But I can standard-lease one for 20% less - @$7K a year for a two year lease. Mercedes prices on both CL and C-series are similar. I don't even have to novate-lease it.
    Last edited by BBDOS CV8; 05-26-2015 at 11:43 PM.

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    Re: Luxury cars have become terribly common, potentially expensive

    Only insecure people buy 'luxury' at the low end. I personally prefer to buy a well equipped non fully loaded model, what Chevrolet calls 2LT. Top level everything without the bling..

    All the trappings of a luxury car without the price

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    Re: Luxury cars have become terribly common, potentially expensive

    Sounds like the Australian car market is going the same way as the European one, by replacing upper mainstream cars with those from the premium brands.

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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by BBDOS CV8 View Post
    This is a highlight and illustration of the pitfalls for Ford and Holden. With no premium-configuration product (hi-performance, RWD with V8 or turbo six) and nothing other than rehashed world cars of no particular disctinction they are going to sink in Australia.

    What are people buying instead of Falcon and Commodore? BMW and Mercedes - not midsize nosedraggers, which is declining even more, Aurion is a Camry V6 anwhere else, it sold around 1000 per month at a peak - down to 25% of that. More decline than Commodore sales.

    I have the lastest leasing info from my work. A BMW 2 M-sport convertible 120 is retail priced roughly double a SS-V Redline Commodore with 6.0 and auto

    But I can standard-lease one for 20% less - @$7K a year for a two year lease. Mercedes prices on both CL and C-series are similar. I don't even have to novate-lease it.
    Holden and Ford could have premium configurations coming out the backside, it would make little difference. People are buying the luxury brand, not a product specification. As Toto says, Australia is following European tends. The hope of people like me is that the very strength of the German brands and the proliferation of down market models to take advantage of that, is the poison pill that damages those brands, such that outlier brands like Cadillac and Jaguar that are relatively rare and have not gone down market have a fighting chance. As for "common" brands like Chevy, Ford, Holden and Opel, they will continue losing share, especially of their more expensive models.

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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by BBDOS CV8 View Post
    This is a highlight and illustration of the pitfalls for Ford and Holden. With no premium-configuration product (hi-performance, RWD with V8 or turbo six) and nothing other than rehashed world cars of no particular disctinction they are going to sink in Australia.

    What are people buying instead of Falcon and Commodore? BMW and Mercedes - not midsize nosedraggers, which is declining even more, Aurion is a Camry V6 anwhere else, it sold around 1000 per month at a peak - down to 25% of that. More decline than Commodore sales.

    I have the lastest leasing info from my work. A BMW 2 M-sport convertible 120 is retail priced roughly double a SS-V Redline Commodore with 6.0 and auto

    But I can standard-lease one for 20% less - @$7K a year for a two year lease. Mercedes prices on both CL and C-series are similar. I don't even have to novate-lease it.
    Exactly right. Everyone is leasing these vehicles rather than purchasing them. That way they get to keep up with the Joneses and luckily for them they usually are out of the car before the warranty expires and the ridiculously expensive spare parts prices hit. Personally I wouldn't have any Euro as they hold no interest to me (although you probably know that already, lol) but I couldn't agree with you more about holden and fords position. I don't think they will completely tank as they do still have Dedicated 4wd vehicles like colorado 7 (despite its looks) and Everest and more importantly pick up sales that will keep them going. I don't think they will ever be in the top 5 again though. Those days are long gone.
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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by patrickbec View Post
    Holden and Ford could have premium configurations coming out the backside, it would make little difference. People are buying the luxury brand, not a product specification. As Toto says, Australia is following European tends. The hope of people like me is that the very strength of the German brands and the proliferation of down market models to take advantage of that, is the poison pill that damages those brands, such that outlier brands like Cadillac and Jaguar that are relatively rare and have not gone down market have a fighting chance. As for "common" brands like Chevy, Ford, Holden and Opel, they will continue losing share, especially of their more expensive models.
    They both did - and more than competitive up to about ten years ago. Then the R&D got put on the dripfeed. HSV had product easily capable of running with the M5 and AMG iron. What happened? GM pulled the plug. Ford had a turbo six with more performance 0-100 than any German brand in 2008. What happened? Not 'one Ford' so not important to keep it updated and marketted and relevant to the customers. Neither would compete with $200K vehicles, but Holden owned the $50-100K market, with high-margin upper end Calais and Caprice and HSV GTS, Senators and Grange. Now, those guys have gone, sick of waiting for a new body shape, new powertrains (Holden had DI V8s on test in 2006).

    Detroit ran down the local engineering and production, they have just given it up wholus-bolus to the German, Italians, English and Japanese.

    6000 HSVs, at an ATP of >$50K - you do the math on 6000 GM Powertrain V8s, trans, Delphi ECUs and other electronics for GM subsidiaries. It isn't only the wholesale value of the cars, marketing accessories and parts and service (and HSV parts are usually a fair bit more pricey than near-identical interchangable Holden parts). With lost Holden engines, and now GM V8s come in only trucks and relatively few cars You lost GM-P their biggest external customer, and maybe 10% of annual production. All this has a flow-on effect into other product, like V8 viability longterm. Corvette numbers have basically krept down year-year - yes, new gen for a couple years it does well. Then when it reaches saturation it tapers off. Why keep things like the LSA, LT4 around - they wouldn't be justified by pinprick CTS-V or Z-whatever Camaro numbers.

    That's a $bill or more of annual business, just pissed against the wall.
    Last edited by BBDOS CV8; 05-27-2015 at 04:56 AM.

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    Re: Luxury cars have become terribly common, potentially expensive

    Serious question, how's the reliability of the Germans down under? I only ask because German cars don't like very high temperatures and I think Australia is on the warm side of the equation.
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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by LetsRace View Post
    Serious question, how's the reliability of the Germans down under? I only ask because German cars don't like very high temperatures and I think Australia is on the warm side of the equation.
    Lots of people get rid of their euros once the warranty runs out, no one wants to own once the warranty is gone there's heaps of 5 yr old mercs, bmw etc for sale.
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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by BBDOS CV8 View Post
    They both did - and more than competitive up to about ten years ago. Then the R&D got put on the dripfeed. HSV had product easily capable of running with the M5 and AMG iron. What happened? GM pulled the plug. Ford had a turbo six with more performance 0-100 than any German brand in 2008. What happened? Not 'one Ford' so not important to keep it updated and marketted and relevant to the customers. Neither would compete with $200K vehicles, but Holden owned the $50-100K market, with high-margin upper end Calais and Caprice and HSV GTS, Senators and Grange. Now, those guys have gone, sick of waiting for a new body shape, new powertrains (Holden had DI V8s on test in 2006).

    Detroit ran down the local engineering and production, they have just given it up wholus-bolus to the German, Italians, English and Japanese.

    6000 HSVs, at an ATP of >$50K - you do the math on 6000 GM Powertrain V8s, trans, Delphi ECUs and other electronics for GM subsidiaries. It isn't only the wholesale value of the cars, marketing accessories and parts and service (and HSV parts are usually a fair bit more pricey than near-identical interchangable Holden parts). With lost Holden engines, and now GM V8s come in only trucks and relatively few cars You lost GM-P their biggest external customer, and maybe 10% of annual production. All this has a flow-on effect into other product, like V8 viability longterm. Corvette numbers have basically krept down year-year - yes, new gen for a couple years it does well. Then when it reaches saturation it tapers off. Why keep things like the LSA, LT4 around - they wouldn't be justified by pinprick CTS-V or Z-whatever Camaro numbers.

    That's a $bill or more of annual business, just pissed against the wall.
    Development costs and profits for the GM V8 isn't paid by Corvette or Camaro. Its paid for the more than three quarters of a million pickup trucks (plus SUV variants).

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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by kts350 View Post
    Lots of people get rid of their euros once the warranty runs out, no one wants to own once the warranty is gone there's heaps of 5 yr old mercs, bmw etc for sale.
    You'd think eventually that would hurt residuals values, thus driving up the cost of leases.

    As patrickbec pointed out above, there is some sense of 'getting enough rope to hang yourself with.'

    Funny to watch people's attempts at buying status on the cheap. This argues FOR having outlandish flagships that bestows honor downward upon the entry lux cars people actually buy.
    Like they'd rather have the smaller/lesser version of a bigtime brand than have the best version of the 'common' brand - even if the common brand actually gives more features/size/power for the money.
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    Re: Luxury cars have become terribly common, potentially expensive

    The problem is most modern cars are more susceptible to premature failure thanks to higher tolerance requirements, stringent servicing regimes to maintain those tolerances, and, an ever increasing reliance on sensitive electronics.

    The factory extended warranty is this decades must have accessory.

    In other news, the C Class is one of the best looking cars on the road almost irrespective of specification.
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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by KingElvis View Post

    Funny to watch people's attempts at buying status on the cheap. This argues FOR having outlandish flagships that bestows honor downward upon the entry lux cars people actually buy.
    Like they'd rather have the smaller/lesser version of a bigtime brand than have the best version of the 'common' brand - even if the common brand actually gives more features/size/power for the money.
    What's the attraction to buying the best version of a common brand?

    Cars are like real estate. You don't want to own the most expensive house in a mediocre neighborhood. You want to own a decent house in a great neighborhood.
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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by mbukukanyau View Post
    Only insecure people buy 'luxury' at the low end. I personally prefer to buy a well equipped non fully loaded model, what Chevrolet calls 2LT. Top level everything without the bling..

    All the trappings of a luxury car without the price
    So in most cases you would be buying a fully loaded FWD family hauler versus a lightly optioned RWD sport sedan. There are exceptions but that's the norm. There's a big difference in engineering IMO.

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    Re: Luxury cars have become terribly common, potentially expensive

    Quote Originally Posted by mbukukanyau View Post
    Only insecure people buy 'luxury' at the low end. I personally prefer to buy a well equipped non fully loaded model, what Chevrolet calls 2LT. Top level everything without the bling..

    All the trappings of a luxury car without the price
    Exactly, I don't get why some people drive in penalty boxes just for the badge. Actually I do, thankfully I don't suffer from it.

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