Despite the recession, which normally devastates the industry, 2001 was the second best new car sales year in history, with 17.1 million new cars sold. The highest new car sales number came in 2000, when sales reaching 17.35 million.
Hans J. Wichter, president of Stoddard Imports, an Audi/Porsche dealership, has been in the car business for 26 years and has watched the industry — especially the luxury car market — go through a host of changes.
“Horse power used to be really big,” says Wichter. “Quality is the big thing now. And the customer is much better informed about what these cars are capable of doing.”
Consumers are willing to pay for quality and pay even more for luxury. According to an industry study, the average expenditure for a new car in 1997 was $22,243, an increase of 16.3 percent over 1993; the average price of a luxury car has risen approximately $2,000 a year since the late ’80s.
In light of the growing demand for amenities, the luxury market has become more inclusive. Take, for example, Audi, which recently returned to the luxury market with its A4 series.
The automaker covered all its bases, offering models priced as low as $25,000 and up to $75,000. The lower-end models offer fewer horsepower and upgrades, but consumers still get the status of driving a higher-end vehicle without paying for a top-end model.
The move to make luxury affordable to a larger segment of the car-buying market has influenced the auto industry to produce “near-luxury” and “mid-luxury” lines. With these less expensive lines, companies including Audi, Mercedes and Lexus are trying to hook a younger segment of the market to garner brand loyalty.
“There are more car manufacturers that want to get into the luxury car market,” says Wichter. “For some models, they have lowered the price to make it more affordable.”
It’s a win-win situation for manufacturers and dealers. With more affordable models, they increase the market segment and instill brand loyalty that will stick with customers when they want to upgrade.
Luxury automobiles are also targeting baby boomers and marketing to women.
More than 50 percent of new cars are purchased by women, and Wichter says they’ve done their homework.
“Our average customer is between 35 to 65, but there are many more female customers, and they are very informed,” he says.
With the change in the demographics of the luxury car consumer, the focus has moved away from the zero to 60 mentality and toward safety and handling features.
“Safety and handling are the No. 1 priority,” says Wichter. “They want to know what will happen to the car in an accident … but they also want to know how they can avoid an accident.”
Luxury cars are usually the first to be equipped with the technology that often trickles down to less-expensive models. Keyless entry, once considered cutting edge, is now standard for even the least expensive Volkwagen.
Luxury now means global positioning systems, brake control and vehicle skid control, charcoal air filters, heated seats and headlight washers. Of course, there are luxury trends that were outdated almost as soon as they hit the market.
“At one time, the big hype was the six-CD changer in the trunk,” says Wichter. “But now that would be a huge inconvenience.”
One of the benefits automakers find in the luxury car market is that it is relatively unaffected by normal market indicators. Researchers have found that sales of SUVs, sports cars and light trucks fall during recessions and are affected by indicators such as unemployment rates, while sales of luxury cars and full-sized pickup trucks remain unaffected.
The prominent predictors for luxury passenger car and SUV sales are disposable income and the Standard & Poor’s 500, while increases in gas prices and interest rates mean weaker sales.
One thing that has not changed is the attitude of the consumer who buys a luxury car. If you’ve spent a lot of money on a car, you want people to know it. Wichter says automakers know this, and have focused on making each line distinctive.
“The lines are distinctive and identifiable,” he says. “When you look in the rearview mirror, you should know what kind of car it is — that is brand identification.” How to reach: Stoddard Imports, (440) 951-1040 or www.stoddard.com