• Mar 24th 2011 at 2:00PM
  • 77
The Chrysler 200 starts at $19,000. Can it really be ca... The Chrysler 200 starts at $19,000. Can it really be called a luxury car? (Chrysler)
When Chrysler ran its 2011 Super Bowl ad for the Chrysler 200, all the attention was on the fact that the automaker spent $9 million on an unprecedented two-minute commercial that starred music legend Eminem. But there was a curious part of the ad's message many people missed.

The Chrysler 200 is pitched in the ad as being not only "Imported from Detroit," but also as "luxury." However, the 200's sticker price ranges from $19,000 to $27,000 for the convertible version. Such a low MSRP hardly seems like luxury.

But auto executives say the whole notion and definition of luxury has changed and continues to change as the country works its way through the economic hard times of the last few years.

General Motors' Buick brand has never been considered genuine luxury, but that is the way the company is pitching it these days. Ads for the Buick LaCrosse, for example, often compare the car to a Lexus. "Buick is a legitimate luxury car, and beats a Lexus ES350 on many features and performance, so we believe it absolutely is luxury people will appreciate as much for image as value," says Buick vice president of marketing Tony Disalle.

What is "True" Luxury?

Because some "mass-market" brands like Hyundai and Volkswagen have been introducing new cars that climb well above $40,000 and $50,000 price tags, and some luxury brands like Audi and Mercedes-Benz have slid down the price ladder to what is now Buick territory, the lines of "true" luxury seem to have blurred.

"The luxury car is the one someone attending a country club doesn't have to explain," says marketing consultant Dennis Keene.

But with country club memberships way down in the last three years, is that even a good yardstick?

Industry consultants and marketing experts point to a generation gap the "near luxury" brands like Chrysler, Buick and even Hyundai are trying to exploit. "When baby boomers came of age and money, they rejected their parents' luxury brands like Cadillac, Lincoln and Buick," says industry consultant Cameron McNaughton of AutoPerspectives.com. "You have a new generation of buyers that over the next decade will move into the luxury segment and while they are aware of Mercedes, BMW and Lexus they think of them as their 'parent's cars,' not necessarily a fatal flaw, but they are certainly not perceived as being that special," says McNaughton.

When Lexus's top selling sedan, the ES350, has a starting price of $36,000, and a Buick has a comparably priced, better styled and comparably or better equipped LaCrosse for $33,000, who is to say which is the true luxury car? Additionally, says McNaughton, "A lot of people entering the luxury car category are also going through their first real recession and they are going to define 'value' a little differently and want to demonstrate it."

Chrysler vs. BMW vs. Cadillac

Charles Kelly, a 38-year old digital advertising executive in Leonia, NJ is one such car shopper looking through a different lens. His company did well last year, even in the difficult economy, and he wants to spend some of his bonus trading up to a better set of wheels. "I had Jeep, and now I'm looking for a nice looking sedan." What's on his shopping list? It's a surprising mix: a BMW 5 Series, Chrysler 300C and Cadillac CTS. "The BMW 5 is the most expensive, but will hold its value better than the other two, but I'm looking at the Chrysler and Caddy seriously because I like the styling and they are considerably less expensive." The image factor? "All three are great looking cars and perform well, and that's all I really care about," says Kelly.

One of the ingredients to establishing true luxury credentials for a brand whose prices start at or below $30,000, which is the case with Lexus and Buick, is a "halo" vehicle. "It's easier for a $30,000 Lexus, for example, to have credibility and cachet with the wealthier consumers as true luxury when the top of the brand, the LS400, is over $70,000. Even Lexus, the number-one luxury car brand in the U.S. based on sales, though, has seen the gap between its prestige and that of Mercedes-Benz. And maybe it is feeling the hot breath of brands like Hyundai and Buick on its rear fenders, which is perhaps why the Japanese brand is launching the $375,000 Lexus LFA super-luxury car at the end of this year to boost its luxury credentials.

"That's pretty 'old school' thinking," says Ford global marketing chief James Farley, who ran the Lexus brand for Toyota before coming to Ford in 2007. Farley is trying to revive the Lincoln brand for Ford, since the company sold off Jaguar, Land Rover, Volvo and Aston Martin. Lincoln will introduce a new car priced below $30,000, but Farley says he is not interested in an expensive halo car such as a rear-drive sports car priced above $80,000. "I don't believe people buying cars below $50,000 care one way or the other if you have a six-figure super car in the showroom...this is a different time than it was," says Farley.

VW and Hyundai "Movin on Up?"

In 2004, Volkswagen, which literally translated means "the people's car" tried to go way up the price ladder and launched the Phaeton luxury sedan, which carried a sticker of $85,000 and legitimately rivaled a Lexus LS400 or Mercedes S Class, for features and comfort. But it is widely considered a marketing and business fiasco. VW also sells a Touareg SUV that can cost over $60,000. "It is relatively easy for a luxury brand with true up-market cred to introduce lower priced models, but it is devilishly hard for brands whose popularity is at the low end of the market to reach up that far," says consultant Keene.

Now, Hyundai is pursuing a similar strategy, though it has enjoyed better success than Volkswagen in some ways. The Hyundai Genesis was modeled after the BMW 5 Series, and is the Korean automaker's attempt to move the Hyundai brand up market so that it can cover every kind of buyer. It sold 22,000 of the $33,000-plus sedans last year in the U.S., about four years worth of VW Phaeton's global sales. This year, the company raised the bar higher by introducing the $58,000 Equus sedan.

Swedish automaker Volvo, which was acquired by Chinese automaker Geely last year, has never quite been considered a luxury car. In Europe, as well as the U.S. it has been more akin to Buick or Chrysler -- premium, but not luxury. But Volvo CEO Stefan Jacoby, who went to Volvo last year from a post running Volkswagen in North America, says he is leading Volvo "to a true luxury brand positioning."

Jacoby says the cars will be more luxury focused in design and features. "At the same time, though, I absolutely believe and see that the idea of luxury is changing with a new generation and that we can appeal to those who don't want to be so flashy or extroverted in showing their wealth...I think there is a quieter luxury customer that is growing in number."

Buick, Chrysler, Volvo and Hyundai will always be tough sells on Wall Street where Goldman Sachs bonuses are back in full force. That's money that sends traders and partners to the Mercedes and Aston Martin dealers. But the fact is there are fewer members in the fat-wallet brigade than there was before the financial meltdown of 2008. Unemployment remains high, as does the number of people who just aren't looking for work any more.

To a lot of people who are redefining their lives with less money than they used to have, a $30,000 Buick that drives and feels like a much more expensive Lexus or Mercedes is going to feel like luxury enough.


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  • 77 Comments
      TOM
      • 4 Years Ago
      To Englishman545: You are an ignorant idiot. To make such broad general statements about Korean products is ludicrous. I have owned 2 vehicles made by Korean companies and both were well built and on par with any American made automobiles. In fact, they were rated higher in safety, performance, and dependability than most. Infact, my new Kia Sorento EX (made in Georgia, which is in the U.S.) is one of the best built vehicles I have ever owned and I have owned more than 25 vehicles in my life.
      • 4 Years Ago
      the country is going down the tubes,,,there is gonna be a revolution,,,,,this is a 3rd world country,,,,,forget the american dream,,,it became the american nightmare,,,,,,stop worrying about vehicles and start worrying about the government and humanity
      • 4 Years Ago
      with fuel prices on the rise and americas down the drain and in an economy that is still stumbling to get started who can afford a high priced lux car for that matter who can afford a car peroid when we get our obama cars (electric) we will have power grid failures so how do we win what car do we get o i know keep the on u have no payments u will need it for gas thats u r future car payment
      jayman869
      • 4 Years Ago
      Chrylser a luxury brand? Since when? I have always thought that chrysler was bargain no frils type car.
      • 4 Years Ago
      Seems to me like the real snobs are the haters who do not own a BMW or a Benz.....I love my 7-series and I do most of the repair work & maintenance on it myself and at 240,000 miles the most expensive repair ever at a shop was no more than $1000...Not to say that other manufacturers don't make some nice cars because they do but how many Cadillacs & Lincolns out there make it to 200 or even 300,000 miles? Plenty of BMWs & Benz' do
      • 4 Years Ago
      The fact is, people from Europe/BMW/Merc/Audi world just do not want to own up to the fact that there are MANY cars that have closed the gap. For too many years, they have been living off the name plate alone (just like Honda and Toyota). This also includes the American makes (even if most of them are not produced in the US). The differences when comparing like models are so close anymore, that when put in the hands of the "common driver", they can not tell the difference. (do you really think some average Joe can tell when one car is 0 .1sec slower to 60? Or when it takes 2 extra feet to brake from 60. Especially when you are talking stats about handling considering 99% of the population will NEVER take a car to its true limits on purpose). The only thing people have to seperate each car is the name plate and styling. But as I said, that gap is QUICKLY closing. Maybe it is time for people to wise up and truly do their OWN investigating of vehicles instead of letting the media tell you what you want. Guess what BMW/AUDI/Merc people of the world, Cadillac is there, and there are many more right behind them to steal your thunder. As RH said not too long ago: "there are certain auto makers that have been battling so hard over the last several years to make the "better" car that they have ended up making the EXACT same car".
      errtty
      • 4 Years Ago
      I bought a new BMW 735 (gas) in1989 . I had it built because I wanted a 5-speed and there were very few of them in this country. It cost around $60,000. I drove it year-round in the Northeastern U. S. until three winters ago ( 2008 ). It was one of the most satisfying cars I have ever driven. When the wheels ( literally ) started to fall off of the car and it went to heaven, it had 455,000 miles on the clock. Do the math.
      ohger1s
      • 4 Years Ago
      @Rx4U007 Does that Kia come with a mower deck?
      mneely3896
      • 4 Years Ago
      We bought a 2010 Genesis 4.6L in March of 2010. I had only planned on looking at them, out of curiosity. We had looked at Audi's, A4, S4 and A6 and I looked at the Camaro 2SS. We got the Hyundai and I couldn't be happier with that decision. It has a 0-60 time that is equal to our SLK350, the appointments of the interior are absolutely 1st class. Until you drive one, you will have no idea, just like me.
      Givemeabreak
      • 4 Years Ago
      Well, I guess I am one of those idiots that you think owns a Mercedes for status. In fact, the reason I own one is because it was the car I got the best deal on. In fact, this is my second Mercedes. The first one was an R500 that was leased for $40 less a month than the price quote I got for a Honda CRV. My second car lease is the same in price per month as my first. Here's where the difference lies: if I need to get my car serviced, I can pull right up to the service area and someone is there to greet me and take care of me on the spot. I am done and out of there in 5 minutes. Or, if I can't make it to the dealership for service, someone will come to my home and pick up my car. I can also have a loaner anytime I want during service, including oil changes. Also, all my standard services for the car during the time of my lease are for free. That sure beats the experiences I had for 10 years with my assorted GM cars- hour long waits for service, having to find my own transportation while my car is being serviced, getting my car returned to me after service with the same problems over and over again... the list goes on and on. I bought this car thinking I would get quality product with outstanding service. Mercedes did not disappoint me.
      Mr. Incredible
      • 4 Years Ago
      The economy is horrible and people are not making what they used to. People still want to perceive themselves as driving luxury even while on a tight budget. These cars are not luxury and far from ********** a marketing ploy where these manufactures make refinements on the surface. There is a new market called “Ultra Luxury” for cars like the Mercedes S600 and such. If car companies embellish themselves into new territory others will be made an defined to put others in their place. The Clothing market is a similar example. People are getting fatter and obesity is on the rise. Brands keep their clothing sizes the same but drop the size “number” so that consumers feel better about themselves in their brand.
      jazznblooz
      • 4 Years Ago
      While the LFA is luxurious it should be mentioned that it is actually considered a super car, or to be more clear an extreme high performance car.
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