Riding in the Lap of Luxury

This year's New York Auto Show offers a look at new models in the ever-accelerating luxury segment

New York's luxury shopping avenues—Fifth, Madison, and Park—have a new rival for a few days: 11th Avenue's Jacob Javits Center is the venue for the New York Automobile Show, where attendees get an early look at new luxury vehicles.

Scattered among the plebeian, economically priced vehicles, are the super-selling—and often super-priced—luxury models. Almost 200 gleaming, glowing, glamorous sedans, convertibles, coupes, crossovers, sport-utility vehicles, and sports cars will be displayed to the public Apr. 5 through Apr. 16.

The Price Points of Luxury

Luxurious is a euphemism for expensive, right? So just how much a person spends depends on the coveted vehicle—as well as one's bank account and credit score. Fortunately for lux carmakers, there are now millions of people in the U.S. who can easily afford luxury: According to TNS Financial Services, there are 8.9 million millionaires in the U.S. today, with an average net worth of $2.2 million.

What's the price range of a luxury car? From a starting level of wannabe luxury at $30,000 to $45,000, the price tag moves to $50,000 to $80,000, then to around $110,000, and ends with a few at a tad under $150,000. Of course, there are also the hedge-fund levels in the mid-six figures—and even higher.

What Products Are Available?

If it has four wheels and a motor, it's available in the luxury category. And there's a huge variety. Brand names abound. Choose from a select group of marques including Audi, Bentley, BMW, Cadillac, Jaguar, Lamborghini, Lincoln, Maserati, Mercedes-Benz, Porsche, and Rolls-Royce. Bottom line? If it's not on display at the New York Show, nobody makes it, and of course, you don't need it.

What Determines Luxury?

It's very personal, often determined by look, touch, sound, ride, handling, and materials. There's a never-ending list of refinements and attributes associated with luxury cars. The Lincoln division of Ford (F) has a full page of standard equipment on its MKX model. But what's standard for some models is an option on others.

Personal refinements, expectations, and desires can often make or break the sale. In the seat category, people ask themselves questions like, Is the seat really comfortable? How many adjustments are possible? Is it heated and cooled?

Then there are other variables that add to the comfort and security of a luxury vehicle—including the sound system's number of speakers, collision-avoidance systems, navigation programs and screens, no-flat tires, color, design cues and lines, steering wheel adjustments, exterior and interior lighting, headlight fragrance—all of these are in the eyes, hands, seats, and psyche of the buyer.

How's Business?

Amazing. Exceptional. Outstanding. Kelly Blue Book, the semi-official compiler of automotive price and model data and history, has some impressive information regarding the luxury-vehicle market. In the 1995-96 model year, there were 56 luxury cars on the market. Today, that number is 194. Consider Porsche: "In 1993, Porsche sold 3,700 cars for the year," says Peter Schwarzenbauer, president and CEO of Porsche Cars North America. "That's what we now sell a month."

Sales results for the best-selling luxury brands—Audi, BMW, Mercedes-Benz, and Lexus—are either good or very good for the first quarter of 2007, according to researcher Auto Data. So far this year, sales are up more than 17% for Audi and just over 9% for Mercedes, for example.

Despite the higher price of gasoline, the international problem of global warming, the recent Supreme Court decision regarding the Environmental Protection Agency (see BusinessWeek.com, 4/2/07, "Court Turns Up the Heat on Global Warming"), and some lingering doubts about the nation's economy, never have so many automobile manufacturers sold so many expensive vehicles.

Before it's here, it's on the Bloomberg Terminal.