Last post on Jan 28, 2013 at 5:55 PM
You are in the Sedans
What is this discussion about?
Audi A8, BMW 7 Series, Jaguar XJ-Series, Lexus LS 460, Mercedes-Benz S-Class, Volkswagen Phaeton, Maserati Quattroporte, Mercedes-Benz CL-Class, Sedan
Let's try to define this forum as being limited to luxury performance vehicles where the mainstream version in a typical configuration has an MSRP of at least $60k.
A luxury vehicle with a base price of $59k qualifies because it would typically be bought with some additional equipment, bringing the MSRP over $60k.
Vehicles like the E, 5, A6, M, or GS, even if available in certain versions over $60k, don't qualify because they are cars from companies that have higher end cars in their lineups.
#5024 of 24726 Michael
May 17, 2004 (9:08 am)
I think merc1's arguments are simple monetary demographics. The cheaper something is the more buyers it can attract. It's far too logical an assumption to argue with as far as I'm concerned. There are simply more people that can reach the price point of an LS430 than can reach that of an S-class - particularly the $85K S-500. Thus it should sell more based on those broad paramaters. There are many other variables of course that do enter into it.
Unlike BMW I've not seen MB subsidize leases. I said before I could have had a 7 for the price of an LS430 lease even though the cars were more than $10k apart. I've never seen such a deal on an S-430 nor was I the least bit interested in the 7 despite the lease discount. Nevertheless I pay attention to the pricing in this segment because its predictive of the future. What it tells me is LS430 prices will rise or there will simply be added options that will increase price whereas 7-series prices are probably going nowhere. The S - not sure probably staying as is or increasing slightly. Personally I think it has held up well - far better than the much newer 7.
With all that said - there are definitely a substantial core of buyers for both cars (plus any other car in this segment) that can afford either (or again any other car here). That's why Lexus has easily moved the average price into the $62-66k area. It used to be $55-59K prior to 2001. On the other hand MB had to drop the price of the S-class in 2000 or they would have had their lunch eaten. They would never have done that if price was no object.
But there is no question that the LS430 has moved way upstream from 1990. I've never heard merc1 deny that or even hint that is not the case. Heck I know two LS430 ultra owners that can own a dozen Maybachs at the drop of a hat. I don't think that type of buyer was in the Lexus demographics in the early 90's though.
#5025 of 24726 ljflx
May 17, 2004 (10:02 am)
At the $70K price point, I do think *many* (not all) buyers can truly afford either an S or an LS. Prestige would favor the MB, reliability and build quality would favor the LS. So the age-old question: IS the LS selling more becos it is cheaper than the S despite the *styling* advantage of the S over the LS ??? Styling is, IMHO, the least bit of a reason to buy a $70K car, there is a lot more than mere aestethics at this price point. Prestige may actually rank way up on the list. Methinks that Lexus has actually risen almost to the same level of MB such that people buying LS believe that owning a Lexus gives them a lofty status about equal to owning an MB. Listen to your colleagues, friends and acquaintances compare your Lexus with an MB. They often have equal admiration for both cars. These people count way more than the beffudled eyes and opinions of a few individuals here who don't even own any of these name plates... In my neighborhood of solid upper-middle class folks, there are cars of all shades of luxury, but are mostly either Lexus (LS) or BMW (3- and 5-series), with a couple of MBs (mostly E and one CLK). Proves nothing, but that people that can afford MBs often choose other brands and may well account for the loss of sales in MBs, besides its higher prices....
May 17, 2004 (10:12 am)
Some months back we got into an extended discussion about higher prices vs higher prestige and their effects on MB sales. Basically I gave up on discussing it after we couldnít see eye to eye. Maybe Iím bored or something, but here I go again.
It is an economic truism that, EVERYTHING ELSE BEING EQUAL, a higher priced product will sell fewer units. However, in the case of MB vs Lexus, everything else is manifestly NOT equal. In particular, we all agree that MB has higher prestige than Lexus, based in part on 114 years of heritage. This is something that Lexus just canít do much about.
Two products, A and B, that are identical to each other in all aspects of desirability should sell in the same quantities if priced the same. Two products, X and Y, that are identical in all aspects of desirability EXCEPT for prestige, will NOT sell in identical quantities if priced the same. The higher prestige product, letís say X, will sell more units, if X is priced the same as Y. It follows that X could be priced at some level HIGHER than Y and still sell the same number of units as Y, so long as the price differential is in line with the perceived extra value accorded the additional prestige.
Put another way, suppose there were a Ferrari and a Kia that were identically desirable in all respects except for the brand/prestige. If the Ferrari were priced only 1% higher than the Kia, do you still think the lower-priced car would sell more units? I donít. I think the Ferrari badge is worth something between 10% and 50% more than the Kia badge.
Back to MB and Lexus. You keep pointing out that we shouldnít compare MB units to Lexus units because MB has higher prices in some lines. What Iím saying is that there is an offset to this, namely the higher prestige that goes with the MB nameplate. MB really SHOULD be able to charge higher prices, because of its higher prestige. Prestige has a value that people are willing to pay for. Now, pricing would be a more legitimate handicap if they were trying to OVERcharge for it, but we donít know that. We donít really know exactly how much the prestige of an S is worth in comparison to an LS.
May 17, 2004 (10:56 am)
any of you guys ever watch "Groundhog Day" with Bill Murray?
#5028 of 24726 oac/syswei
May 17, 2004 (11:06 am)
OAC - I think the prestige factor is less and less important and I think its narrower than ever anyway. When I cross- shopped I had to move to the S-500 because the S-430 was unimpressive and it cost more to begin with.
syswei - I think Lexus pretty much hits their mark in every car except the GS and IS. I like the styling of the GS in general but it falls short of the E by a decent margin. This is a crucial line-up car and Lexus has not given it its proper investment. Unlike the LS this car needs to meet the targets of a wide audience from someone who wants to put a ton of sportclad metal and tuning gear on it to to someone who keeps it sterile. Cut into the marketshare of the E and 5 here and you really will hurt MB and BMW. But Lexus fails badly in that arena because of its singular approach (whereas MB and BMW excel) but I have no doubt that Lexus is about to change that reality and perception like night and day. Plus I think the hybrids will be a major differentiating factor in the future. Combine that existing lack of investment thought with the fact the GS hasn't even been refreshed in recent memory and you have a key line-up car that falls short. But as I said I think that's about to change.
May 17, 2004 (11:32 am)
I think merc1 suggested that one of the GS's problems is that it is being marketed, to some extent, as 'sporty', and that this might have been a mistake on Lexus' part. I see his point. Even the original, in 1992, was marketed as a 'sport sedan'...even though I believe it was slower, 0-60, than the LS of the time. I think I remember a marketing tagline that went "something wicked this way comes" (or was that in 1998?) The E other hand I perceive as being marketed more as a mainstream luxury car, with the AMG variant taking on the sporting role.
Anyway I agree with you that the new GS offers some hope, especially once it goes hybrid. Styling wise, however, I still...based on pictures only...don't see it as especially pretty.
May 17, 2004 (11:38 am)
Merc1 is dead on here. They should have just gone after the E crowd rather than try to take on both brands with a car that was too narrow in approach.
I will have to see the new GS in person. The pix didn't do much for me but my cousin said the car drew tremendous attention at the NY show and he loved it. Plus the auto rags are giving it a lot of high marks. Let's see.
May 17, 2004 (1:37 pm)
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#5032 of 24726 maxhonda99
May 17, 2004 (10:34 pm)
There is no data to show what is common market sense. You still haven't taken a look at the overall lineup of Lexus or Mercedes. If you did that you'd see what I'm talking about. Your theory about sales ignores price completely. No where did I say that the LS430 outsells the S-Class because of price alone....I said price is one of the main reasons the LS outsells the S. You're acting like everyone who buys a LS can just say ok to another 20-30K for an S-Class. Not true.
Cars outsell other cars for varying reasons and you know this. I think you know full well that the E-Class is new and the GS is old and that is main reasons for their sales postions, right now at least. I've also stated a many times that when a car like the S-Class or LS get a facelift their sales shoot through the roof during that year. This is backed up by fact, just look at the LS this year and S-Class last year.
My point about sales is one dealing with the entire lineup from MB and Lexus and I'm sorry if you can't see the huge price differences that exists between these two brands...once you get past the 30-55K models. You pretend as if the SL, CL, AMG models and the S500 and up don't exist when it is time to count up the sales and that these cars aren't at a disadvantage when it comes to price. Lexus doesn't even compete in the space above 70K. How can this be a level
"And yet again, I gave you 2 examples in the Lexus and Mercedes line that go head to head where your claim of lower prices selling more Lexus' simply don't hold water."
And they are just that 2 examples, not the entire lineup.
The RX330 is brand new and the ML is old, this is exact same reversed when it comes to the GS and E-Class old/slow sales, new/high sales.
Mike this also applies to your question also, simple market trends...the S is no the oldest car in the group and the LS just got a facelift. See ljflx's post right after yours....it's really very simple.
None of that matters one bit if the person buying can't make the jump from a 55-64K LS430 (the bulk of LS sales) to a 74K S430 or 83K S500. Prestige means nothing unless they buyer can actually come up with the extra money. Your theory has always assumed that this is not an issue, and that isn't realistic at all. And please don't take this like I'm saying LS buyers are broke or don't have money, quite the contrary, but not all of them can make the jump...especially those who barely got into a base LS, and S-Class isn't an option for them no matter what the S-Class' prestige level is.
May 17, 2004 (10:46 pm)
I understand your point about exclusive models vs. volume models, but it can work if the quality and reliability is there across the board. What a lot of Americans forget is that Mercedes was always a volume maker, just not in this country. The volume doesn't kill the status, the below 30K models does. They've always been volume just not at some of the price points they're trying to hit with the C230 Coupe and what not. They should stick to 33K V6 models upwards.
I don't see anything like night and day happening with the GS. The new car is more or less the same as the old car, sporting and they're already talking about how sporty it is going to be, a mistake. BMW drivers aren't going to embrace the car for that purpose.
As usual very good points in your posts.