A luxury vehicle is intended to provide passengers (and often the driver) with increased comfort, a higher level of equipment and increased perception of quality than regular cars (such as economy cars, which are intended as basic low-cost transportation devices) for an increased price. The term is subjective and can be based on either the qualities of the car itself or the brand image of its manufacturer. Luxury brands are considered to have a higher status than premium brands, however there is no fixed differentiation between the two.
Traditionally, luxury cars have been large vehicles, however contemporary luxury cars range in size from compact cars to large sedans and SUVs.
A Duesenberg, "one of the great luxury cars" with custom body by Willoughby
Some car manufacturers market their luxury models using the same marque as the rest of their models. Other manufacturers market their luxury models separately under a different marque, for example Lexus (launched by Toyota in 1989) and Bentley (purchased by Volkswagen in 1998). Occasionally, a luxury car is initially sold under a mainstream marque and is later re-branded under a specific luxury marque (for example the Hyundai Genesis / Genesis G80).
For mass-produced luxury cars, sharing of platforms or components with other models is common, as per modern automotive industry practice.
Several car classification schemes which include a luxury category, such as:
Australia: Since the year 2000, the Federal Government's luxury car tax applies to new vehicles over a certain purchase price, with higher thresholds applying for cars considered as fuel efficient. As of 2019, the thresholds were approximately AU$66,000 (US$51,000) for normal cars and AU$76,000 (US$58,000) for fuel efficient cars.
Italy: The term "auto di lusso" is used for luxury cars.
France: The term "voiture de luxe" is used for luxury cars.
Germany: The term German: Oberklasse (upper class) is used for luxury cars.
Russia: The term (? ("representative class vehicle, also translated as luxury vehicle) is used for luxury cars.
Rental cars: The ACRISS Car Classification Code is a system used by many car rental companies to define equivalent vehicles across brands. This system includes "Luxury" and "Luxury Elite" categories (along with "Premium" and "Premium Elite" categories). The criteria for a vehicle to be considered "luxury" is not published.
Premium compact / entry-level luxury
The premium compact class is the category of the smallest luxury cars. It became popular in the mid-2000s, when European manufacturers-- such as Audi, BMW and Mercedes-Benz-- introduced new entry level models that were smaller and cheaper than their compact executive models.
A compact executive car is a premium car smaller than an executive car. In European classification, compact executive cars are part of the D-segment. In North American terms, close equivalents are "compact premium car", "compact luxury car", "entry-level luxury car" and "near-luxury car".
Executive car is a British term for an automobile larger than a large family car. In official use, the term is adopted by Euro NCAP, a European organization founded to test for car safety. It is a passenger car classification defined by the European Commission.
The next category of luxury cars is known in Great Britain as a luxury saloon or luxury limousine, and is known in the United States as a full-size luxury sedan or large luxury sedan. It is the equivalent of the European F-segment and German Oberklasse segment.
Many of these luxury saloons are the flagship for the marque and therefore include the newest automotive technology. Several models are available in long-wheelbase versions, which provide additional rear legroom and often a higher level of standard features.
Many ultra-luxury cars are produced by brands with a long history of manufacturing luxury cars. The history of a brand and the exclusivity of a particular model can result in price premiums compared to luxury cars with similar features from less prestigious manufacturers.
Long before the luxury SUV segment became popular in the 1990s, the vehicle in this segment was the 1966 Jeep Super Wagoneer,(p3) which was marketed at the time as a station wagon. It was the first off-road SUV to offer a V8 engine, automatic transmission, and luxury car trim and equipment. Standard equipment included bucket seating, a center console, air conditioning, seven-position tilt steering wheel, a vinyl roof and gold colored trim panels on the body sides and tailgate.(p3) By the late 1970s, optional equipment included an electric sunroof,(p4) The 1978 Jeep Wagoneer Limited was the spiritual successor to the Super Wagoneer and was the first four-wheel drive car to use leather upholstery.(p5)
Another precursor to the luxury SUV is the Range Rover, which was released in 1970. It was the first road-going vehicle to have a permanent four-wheel drive system, split tailgate, clamshell bonnet and continuous waistline. The Range Rover had long-travel coil spring suspension and an aluminium V8 engine. Development of the Range Rover began in 1951.
In the mid 1990s, the SUV market expanded with new entrants. By the mid-1990s, the Ford Explorer and Jeep Grand Cherokee were the market leaders for SUVs. The fastest growing sector of this market was for the so-called luxury SUVs, which included the Jeep Grand Cherokee ... the Grand Cherokee's allure: "This vehicle is proof you can have a true off-road vehicle without giving up luxuries and amenities" with the Jeep providing a crucial new intangible factor for buyers--image.
The SUV models generated higher profit-margins than passenger cars, and automakers introduced new luxury models during the late 1990s, starting with Lincoln Navigator in 1997, besides traditional models like the Grand Cherokee. For some manufacturers such as Porsche and BMW, luxury SUVs were the first SUV models they produced. Luxury SUVs catered particularly to the U.S. market where station wagons were unpopular, often being produced in North America (such as BMW Spartanburg) instead of the luxury marque's home country. Some of these models were a unibody construction, instead of the body-on-frame construction traditionally used by off-road vehicles.
During the mid-2000s, SUVs from luxury car brands grew at almost 40 percent in the United States to more than 430,000 vehicles (excluding SUV-only brands like Hummer and Land Rover), at a time when luxury car sales suffered a 1% decline, and non-luxury SUV sales were flat. By 2004, 30 percent of major luxury brands' U.S. sales were SUVs. Crossover SUVs became increasingly popular in the mid-2000s, and manufacturers also began to produce luxury versions of crossovers. The Lexus RX was the earliest luxury crossover on the market, and it has since been the best-selling luxury vehicle in the US. Some luxury crossovers are built on a platform shared with sedans or hatchbacks, for example the Infiniti FX is based upon the Nissan FM platform that also underpins other Infiniti cars. While early luxury crossovers released in the late 1990s have resembled traditional boxy SUVs, more recent crossovers, such as the Infiniti FX and BMW X6, have been designed with a sporting appearance.
Research data from the mid-2000s suggested that luxury SUV buyers did not consider traditional luxury cars (e.g. sedans and coupes), therefore the SUV is becoming the key to bringing new customers to the luxury dealerships.
Luxury cars have traditionally emphasized higher levels comfort and safety, with manufacturers often introducing new safety technologies and comfort amenities on luxury models before they trickle down to mass-market models. Numerous "smart car" features were found on luxury cars as early as 2009.[failed verification]
Luxury vehicles can be a status symbol for conspicuous consumption; however many European luxury car buyers shy away from conspicuous consumption, therefore brands offer buyers the option of removing exterior badges that identify the model name or engine size.
The suspension system of most luxury cars is tuned to prioritise ride quality over handling, however some cars are marketed as "sports luxury" and have greater emphasis on handling characteristics.
Many American luxury cars from the 1970s to the 1990s switched to a front-wheel drive layout with transverse engine, due to the Arab Oil Embargo of 1973 and the 1979 fuel crises which eliminated many FR platforms in favor of the more economical front-wheel drive (FF) layout. From the early 2000s, several of these American luxury cars reverted to FR layouts.
France was a leading producer of powerful luxury automobiles prior to World War II. After World War II, the French government used puissance fiscale tax regulations to encourage manufacturers to build cars with small engines, and French motorists to buy them. The Maserati-powered Citroën SM and the Citroën C6 were arguably the last domestic French luxury cars. In the 2010s, some French manufacturers have attempted to develop luxury cars, however the lack of a historical legacy has hindered these efforts. In 2014, Citroën introduced DS Automobiles sub-brand to market luxury cars.
Following World War II, Germany rose to become an export powerhouse, building on success with the Mercedes-Benz brand, later joined by BMW, which now owns Rolls-Royce Motor Cars, and Volkswagen, which now owns Audi, Bentley, and Lamborghini.
In the Soviet Union, the manufacturer ZiL (then called Zis) began producing limousines in the mid-1930s and GAZ and joined the luxury car market in the early 1950s.
From 1946 to the late 1990s, Cadillac was the highest selling brand of luxury cars in the U.S. and Lincoln Motor Company was the second-highest. Since the late 1990s, Japanese and German brands have sold the most luxury cars in the U.S. In 2010, BMW was the best-selling luxury vehicle manufacturer by sales, with Audi and Mercedes-Benz the second and third highest selling luxury brands.
In the late 2000s, the Cadillac CTS and Cadillac DTS led to a resurgence in the brand's luxury sedans. The equivalent sedan from the Ford group, the 2008 Lincoln MKS, was also regarded as a significant improvement over previous models.
American-built luxury cars have largely been intended for the North American market only, with few models achieving sales success in other countries.
The personal luxury car is an America-specific category of car that reached peak popularity in the 1970s. The cars were stylized, mass produced 2 door coupés or convertibles, relying on standard components.
Since the 1980s, overseas sales of a Japanese luxury cars have increased, challenging the traditional European luxury brands.
Several Asian manufacturers have created sub-brands for the marketing of luxury cars. The first of these was the 1986 launch of Acura (a Honda sub-brand), followed by Lexus (Toyota) in 1989, Infiniti (Nissan) in 1989 and Genesis (Hyundai) in 2015.
Global financial crisis
The late-2000s global financial crisis was the first time since the Great Depression of the 1930s that the luxury car market suffered considerably, something not seen in previous economic downturns. Many such customers saw their net worth decline following the collapse in financial markets and real-estate values. For example, some of the steepest dropoffs came at the high end, including the BMW 7 Series and Rolls-Royce Phantom, and in 2010 Mercedes-Benz unexpectedly dropped the price of the W212 E-Class. The unusually sharp decline in luxury car sales have led observers to believe that there is a fundamental shift and reshaping of the luxury automotive market, with one industry official suggesting that the marques no longer command the premiums that they used to, and another saying that conspicuous consumption was no longer attractive in poor economic conditions. Additionally, mainstream brands have been able to offer amenities and devices such as leather, wood, and anti-lock brakes, previously found only on luxury cars, as the costs decline.
However, luxury vehicle sales did not collapse as much as their non-luxury counterparts. This was aided by growing interest in luxury vehicles from emerging markets such as China and Russia.
Sales in the entry-level luxury segment remained strong throughout the GFC, due to prices being lowered to compete with well-equipped non-luxury cars. For example, in Canada, several luxury manufacturers set sales records in August 2009, due mostly to aggressive incentives on entry-level luxury vehicles. In September 2009, BMW, Mercedes-Benz, Lexus and Audi all saw their Canadian sales increase by more than 10 per cent compared to a year earlier, despite overall Canadian auto sales being down 3.5 per cent compared to September 2008.