RSS RSS Twitter Twitter
Leftlane - news, reviews, and info for the auto-industry
 
 

When it comes to premium cars, conspicuous consumption is out, frugality is in

10/15/2009, 12:56 PM

By Drew Johnson

Before the global economy started to circle the drain, it was natural for premium vehicle buyers to progress through the model hierarchy – that is to move from a vehicle like the BMW 3-Series to the larger and more luxurious 5-Series. However, the recent economic downturn has changed the way most American’s think, with vehicle downsizing becoming increasingly popular.

According to the latest survey from J.D. Power and Associates’ Power Information Network, far more premium buyers are moving down the vehicle hierarchy rather than up. That is a big change from just a few years ago when most buyers steadily moved up through the model ranks.

“Since 2006, we have seen buyers less willing to trade up and an increasing number trading down in their purchase,” Geoff Broderick, PIN general manager, told Automotive News.

In 2006, 15.9 percent of premium buyers moved from a compact model to a more up-scale mid-size model. However, that trend reversed during the first half of 2009, with only 11.5 percent of buyers making the jump to the mid-size ranks.

The change has been even more pronounced in the mid-size to large transition. Whereas 8 percent of buyers made the switch from mid-size to large offerings in 2006, only 4.5 percent of premium buyers have done so in 2009.

On the reverse size, downsizing in the premium segment is more popular than ever. Just 12.6 percent of buyers made the move from a large offering to a mid-sizer in 2006, but 16.2 percent of buyers have made the move down-scale in 2009. The switch to compact vehicles is even more popular, with 14.8 percent of buyers – up from 10.8 percent – going from a mid-size to compact.

There are certainly many factors behind the new downward trend, but the death of conspicuous consumption is leading the rally. The wealthy can still afford to purchase the best an automaker has to offer but, in the current economic climate, it’s no longer fashionable to flaunt one’s money.

“People can afford an S class,” Bruce Schulman, general manager of Beverly Hills Mercedes-Benz, told Automotive News, “but they are getting an E-Class in the same color because they have laid off people or have upcoming union negotiations. They don’t want to be seen as having luxury in this situation.”

The new trend is affecting almost every premium automaker, including Mercedes, BMW, Lexus and Acura, with some buyers making the switch to cheaper alternative from Audi or even Hyundai. The trend has even boosted pre-owned vehicle sales. While there is no denying the down economy is changing the tastes of luxury buyers, it remains to be seen if the new trend will remain constant or revert back once the global economy improves.

    Print This Post

New car price quote

Zero obligation price quote from a trusted local dealer.
 
 

10/15, 1:04 PM

posted by:

RaineMan

I believe “downsizing” is actually a misconception.

The current 3-series is the same size as the previous generation 5-series.

People aren’t getting smaller cars, the cars are actually growing and people are just buying a new one that is the same size as whatever they just got rid of.

10/15, 1:24 PM

posted by:

leftwingagenda

there’s probably some truth to that, but i’m guessing recent economic forces are a bigger factor in the short term…these number suggest rapid and recent change…model bloat is typically on a longer time scale…

10/15, 1:24 PM

posted by:

johnnycanuck

I’m not buying any of that conspicuous consumption crap… ‘oh, I wouldn’t want to do anything that might make the peons think I’m rubbing their noses in it’. Bullsh*t. If I can afford the S class then I’m buying the S class. That’s the (North)American way… dammit!

The reason for these numbers is simply because the rich are hurting just like everyone else. Believe it or not but sometimes the sh*t does flow uphill.

10/15, 1:41 PM

posted by:

American_Cars_Crap

I don’t care about the brand, I care about the quality and durability of a product. Certain brands have respect not because of price but because of reliability. Why is it that cars built by the big 3 have no respect in other parts of the world, even here in California domestic cars are considered a joke, but cars like Honda, Lexus, Subaru can be seen all over the world. Why? respect for the brand because what the brand stands for.

10/15, 1:54 PM

posted by:

leftlane

And this all plays well for the Korean and Chinese auto makers. Good timing on their part. Good luck GM and Chrysler.

10/15, 1:56 PM

posted by:

leftwingagenda

acc you’re missing the point…this article isn’t about brands, it’s about the size of car being sold within brands…i disagree with your statement that “cars built by the big 3 have no respect in other parts of the world” – because frankly that’s ridiculous and easily dismissed (top selling brand in china = respect in other parts of the world, for example)…but i’m not going to degrade this discussion into a brand war…

fact is, this is about people choosing a 3 series over a 5 series, not a honda over a ford…

stick to the topic, please…

10/15, 2:10 PM

posted by:

NickelDime

+1 Raineman.

Pick any car with a long history – it is likely larger than its ancestor, sometimes by a wide margin.

Today’s Civic is larger than the Accord in the 1980’s ever was.

Same with the Corolla – larger than the Camry (and Corona) of yesteryear.

Perhaps the steam has run out of the proverbial up-sizing train, while at the same time, the economy has taken a dump. It’s no wonder people have stopped scaling up the chain – the manufacturers have done it for us.

10/15, 2:13 PM

posted by:

05Z88Path

@ACC: Well in the rest of the US California is a joke, so I’m not going to hold too much value in their opinions on cars.

Now back on topic to the article: I find it hard to believe that people who could afford an S-class but are getting an E-class b/c they don’t want to be seen with “having luxury”. More like, the economy took a sh*t and now people who once thought money grew on trees are coming back to reality and making a little “smarter” decisions. The only exception to my theory would be the liberal Hollywood type who could afford a Mercedes but drives a Prius instead as an eco-status symbol. But lets not dwell on that…

10/15, 2:20 PM

posted by:

NickelDime

@05Z88Path – Say what you want about CA, it is the largest auto market in the US. If it doesn’t fly here, it’s not going to fly in the rest of the country. The design centers have migrated here for that very reason.

10/15, 2:23 PM

posted by:

worst 3

so tired of people trying to make every thing to an import export/ my brand and thing and such.

I would have to agree that it is a combination that the cars have grown in size from what they first where and the economy. i think it more that people like midsized cars then any other in america and that is what the 3 series and C class are now, before they were not and there more expensive then they used to, so people may see them as more upscalle.

10/15, 2:24 PM

posted by:

avus9

these ‘wealthy’ auto buyers are the same type of persons that purchased homes they couldn’t afford in the first place. so guess what happens when their leases end? yup, they trade down.

10/15, 2:26 PM

posted by:

leftwingagenda

-1 nickeldime

if car sizes haven’t changed between ‘08 and ‘09 significantly, yet the size of cars being bought has changed significantly, then it’s not the model bloat that is driving the change in buying habits…

10/15, 2:27 PM

posted by:

Smegley Wanxalot

What couple be more conspicuous than a woman with assymetrical nostrils?

10/15, 2:34 PM

posted by:

05Z88Path

+1 avus9. Agree completely.

10/15, 2:44 PM

posted by:

johnnycanuck

Smegley, I don’t know, but if she also has an Adam’s apple then I’m running like I’m being chased by the devil himself.

10/15, 2:47 PM

posted by:

johngalt

I have heard a few folks who own small or medium-sized businesses use that excuse. Their employees want raises, even during this recession. They feel that if they’re unable to justify raises, they can’t justify more luxury for themselves, either. Even if it ain’t true, they’re still saying it…

10/15, 2:49 PM

posted by:

johngalt

johnny, if she’s got an Adam’s apple, you shouldn’t have been there in the first place. Find a different bar.

10/15, 2:50 PM

posted by:

Smegley Wanxalot

Johnny, if she has an adam’s apple you ARE being chased by the devil himself

10/15, 2:51 PM

posted by:

johngalt

Apologies, johnny, for assuming that Canadians patronize bars. That was an egregious generalization.

10/15, 2:51 PM

posted by:

Bankruptcy2009

That why Smart People are not driving Mercedes in California their Buying the New 2010 Ford Taurus SHO which is a Better Built Better Performance, and better value than the Imports ACC- which is why Ford is taking California by Storm and soon the World Europe and China will want their own Ford Taurus Too!

10/15, 3:14 PM

posted by:

scratchy

smaller cars are getting the options and luxuries that used to be exclusive to bigger cars. lots of people realized this, especially during the crisis.

10/15, 3:16 PM

posted by:

SomeGreek

No we won’t… Mondeo is fine. (And become great with some supercharged small engines!)

10/15, 3:53 PM

posted by:

alsvw

Hence, Hyundai sales going up by 20 to 37% every month globaly.

10/15, 4:12 PM

posted by:

Borat

I think NMOFGM is not feeling well, did not read his commentary on foreign crap and superiority of Buick and Cadillac. Not to be outdone, I did enjoy similar (if not identical) B.S. about Ford superiority over Benz. Right.

RaineMan got a point. However, I was having conversation with “luxury concierge” in NYC (yes this business does well n NYC) and she told me that people under 400K income are hurt and not seeking her services (high end tickets, restaurant reservations etc), however recession have done little to families with over 500K income (except Madoff). Maybe there is point her about conspicuous consumption: even well to do folks got squeezed a bit, if they were not top flight.

10/15, 6:32 PM

posted by:

A4

I’d spend $70k on an RS4 before I spend $70k on an S6, just because a smaller more nimble car with more sporting characteristics is just plain fun to drive by comparison. Unless I have a family, in which case I’ll buy whatever my wife tells me (which in most cases is never going to be a full-sized sedan, how many women want 7’s or A8’s?). I think the fact that smaller cars have reached the right size for most consumers, and the fact that theyre just plain more fun to drive for less than the bigger options, makes them more appealing in this day and age. You arent going to get a piece of plywood into an A4 and you wont into an A6 or A8 either. You can fit the same amount of people, an adequate amount of stuff in the trunk of either, and get the A4 for less, or get one for a similar price with a lot more credentials. If you really think about it, the S4 has the same engine as the similarly priced A6 3.0T, that blends in to the crowd much more, but which one would you rather drive?

10/15, 6:33 PM

posted by:

A4

(Yes I’m also aware that the S4 3.0T has been tuned for more power and such, but please don’t be a nitpicking asshole. You know what I meant.)

10/15, 6:55 PM

posted by:

elviososa

Audi is just overpriced VW.

10/15, 7:31 PM

posted by:

DrFill

Sales of 7-series, Lexus LS, and S-Class sedans are all down 40-50%

Hyundai can’t even get a luxury brand together, but they decide NOW is the time to bring Equus to The States?

Who’s in charge of their product planning?
Captain Crunch?
DrFill

10/15, 7:49 PM

posted by:

comp.mode

This article is the victom of “extremesurveying.” That is a sport played by journalists that have an awesome amount of technology mixed with the lack of available work provided by their employers. It’s commonsence horse**** on steroids. You can get many of the same options on the next size down car that you can get on the bigger car hence the reason for the lack of “upsizeing” within a low-budget market. I dont care what J.D. Power and Associates decide to litter the media with, but stating that wealthier CEO’s volunteering to order the “smaller” car out of sympathy for thier employees will never take place in such a way worth entering data about. Some people are put on too high a pedestal. C’mon.

10/15, 7:56 PM

posted by:

ktulu

Peeps R realizing they don’t need dat much car.

da growth of da 3 mite explain sum stuff

I can’t a4d the S-Class

who in yourope wood bi a Lexus ?
they R smarter’n us.

lot of stupid people in cali, so sno wonder Lexus duz well tghere

da p[rius is good as a stus siympbol abnd nuthin’ else!
care about da evo? gert a dieselm VW!!

da taurus us better than da Carmry irt accord,m but not a NMercedes.

I luve da A8

Lexus LS is just oover-overpriced toyota. da regular totatas R aklready overpriced.

10/15, 10:25 PM

posted by:

Kaizen

Damn Ktulu, get your basic English up and running. You spell like a 12 year old girl text messaging. That **** is embarrassing.

10/15, 11:58 PM

posted by:

LunaticRider

ktulu if i decided to speak from my ass it would make better sounds than your ****ed broken english

10/16, 6:09 AM

posted by:

A4

I think I’d rather listen to what NMOFGM has to say over ktulu

10/16, 8:41 AM

posted by:

BrazilianA3

I hope Americans start realizing that they can have the same luxury and even more driving pleasure with reasonably sized cars…

Here in Brazil (and also in Europe and Asia) cars like my A3 (as well as Civics and Corollas) are called mid-size.

Cars like Ford Fusion are considered large and usually dubbed as “bathtubs”. The Camry and the new Accord are so big that nobody wants them.

Even though the Fusion has a bigger dealer network and costs the same as the less powerful and less equipped Civic, the Honda car sells about 20 times more (being the best sold sedan) just because it´s possible to park it in the streets. I´d like to understand: HOW DO YOU AMERICANS PARK YOUR “MID-SIZE” HUGE BATHTUBS?

10/16, 8:44 AM

posted by:

BrazilianA3

P.S.: When I say nobody wants Accords and Camrys for their huge size, I´m referring just to Brazil, not to Europe and Asia

10/16, 9:27 AM

posted by:

2WheeledSpeed

Maybe we have bigger parking spaces BrazilianA3?

I don’t really pay attention, I park my motorcycle anywhere I flipping want to.

10/16, 9:46 AM

posted by:

twobolt

@RAineman

Sorry, 3 series is still MUCH smaller than the 5 series from a decade ago

Current 3 sedan wb=108.7 and length = 178.20

1999 5 series wb= 113.7 and length = 191.1

Not only that the current 3 series sedan is still 1/2″ shorter than a Toyota Corolla, though the 3 has a longer wheel base.

The 3 is a very compact car. The 1 looks like a large roller skate.

10/16, 11:30 AM

posted by:

Need More Oil For Imports

- A4 -

Buy a Acura, Lexus Or Infinity

10/16, 4:27 PM

posted by:

NickelDime

@BrazilianA3:

2 observations: 1) “Bathtub” is a connotation reserved for small cars – miata, mini, etc “like driving in your bathtub”, if it is used at all.

2) “How do you Amercians park your “mid-size” huge bathtubs”? We aren’t as densely laid out and parking spaces are larger as they accommodate VERY large vehicles, all the way down to compact/mid-size sedans.

I will admit coming from a couple week trip in Europe last week that our cars seem bigger, but we have the space and gas is cheap (in comparison to Europe).

Also…

While small cars outsell large cars in Europe, every person I spoke with on the subject preferred a larger car, but admitted they couldn’t afford the gas / cost. Just because there are fewer, doesn’t mean the desire isn’t there.

10/16, 4:31 PM

posted by:

NickelDime

@leftwingagenda:

It isn’t just the upsizing that the manufacturers are doing – it’s the combination of a consistent upsizing in the same product line AND the economy taking a dump, which is causing people to re-evaluate their needs. I.E. I don’t think the difference would be so pronounced but for the fact that both events are in play.

Also, the refresh cycle isn’t annual – it takes place over 3-10 years for some people. That spans 1-2 generations in cars. The Accord, for example, grew exponentially from the last gen to this one.

10/16, 4:44 PM

posted by:

NickelDime

Great example of product bloat: Honda Accord sedan sizing by generation (from wiki):

Generation W-Base Length Width
1976-1981 93.7 162.0 ??
1982-1985 100.7 164.0 ??
1986-1989 102.4 179.7 67.4
1990-1993 107.1 185.2 67.1
1994-1997 106.9 185.6 70.1
1998-2002 106.9 189.4 70.3
2003-2007 107.9 189.5 71.6
2008-Now 110.2 194.1 72.7

So if you have a 2003-2007 model and you’re ready to trade in, are you going to get a new, bloated Accord or look at the Civic, which has a wheelbase of 106.3, length of 176.7, and a width of 69.0 (similar wheelbase, width, and seating capacity as previous gen accords)?

 
 
You need to log in with your user name and password before you can leave comments.

    

Forgot your Password?

Don't have a user name yet? Simply fill in the form below and click the link provided in the
confirmation email. You must supply a valid email address to complete the registration process.

  
 
 
 
 
  • Login
  • About
  • Contact
Please note that you need to log in with your user name and password before you can leave comments.
  

login
cancel
Forgot your Password?
Don't have a user name yet? Click here to register now.

Simply fill in the form below and click the link provided in the confirmation email. You must supply a valid email address to complete the registration process.

  
submit
cancel
Leftlane is the leading source for automotive industry and vehicle news, new car research, future vehicle information, and reviews. Read by car shoppers, driving enthusiasts, autoworkers, executives, and investors, the website is updated throughout the day with the very latest auto news - as it happens.

Leftlane also provides consumers with accurate and media-rich information on every car currently on the market. In-market shoppers can review specs, read overviews, view high-resolution images, watch videos, and estimate pricing. No other automotive publication brings together the same degree of timeliness, thoroughness and accuracy as Leftlane.
 
submit
cancel