The Return of Luxury

The best comes at a price. And that price is being paid as people seek not only luxury but value.

While I might have been a little iffy on the recovery from the Great Recession, a comment from Dr. Dieter Zetsche, chairman of the board of Management of Daimler AG and head of Mercedes-Benz Cars, put that to rest when he was making comments on the occasion of the launch of the 2014 S-Class, which is not so much a car as a technological tour de force.  He pointed out that even though the previous generation S-Class is being phased out, it is the best-selling car in the segment.  In fact, according to Autodata (motorintelligence.com), through June, S-Class sales are up 12.7% compared with last year, 6,211 units.

Which led me to take a look at how some of its competitors are doing in this full-size luxury car class—and we’re talking full-size and luxury with all those words signify, not the meanings that some car makers apply to their cars that are, vis-à-vis the competitive set, not really in the set.

The Audi A8 sales are up 2.16%, to 3,099 through June.  The BMW 7 Series isn’t doing as well percentage wise, off 9.4%, but 5,154 units have been moved so far this year.

The gains for the Lexus LS 460 are most impressive of all, up 72.3% to 5,163.

Granted, all in the number of vehicles is under 20,000.  If you want to put that number into some rather, well, bizarre context, realize that in the month of June alone—not the first six months, just June—Ford sold 68,009 F Series trucks.  Triple all of the year-to-date sales for the aforementioned lux cars with more room to spare.

That was the best F Series June since 2005, and the 23rd consecutive increase in sales.

Clearly, there is a considerable delta—functionally, financially—between a pickup and a high-end sedan.  But both types of vehicle indicate that the economy has shifted, with the truck pointing to things like housing starts and the luxury vehicles to the fact that there is more disposable income being spent.

Those are solid indicators that things have changed for the better.  And while someone might say that the S Class and the others are simply further evidence that the “1%” are, well, the “1%,” arguably the F Series is appropriate for the 99%.  It is happening across the board.

One of the things that is important about cars like the S-Class is that they are where technological innovations for the rest of the automotive fleets begin.  For example, the new S-Class is the first car that uses only LED lighting—inside and out.  It has a full suite of driver-assistance systems—from braking and steering to lighting to driver notification that a rest stop is in order—that are predicated on sensors and controllers that will undoubtedly become the norm in other vehicles. . .several years down the road.  That’s because when there are limited volumes, there are higher costs.  But as the volumes build, those costs will come down and so those technologies will go into lower-priced but higher-volume vehicles.

Zetsche said of the car: “Rather than being about safety or aesthetics, power or efficiency, comfort or dynamism, our aspirations were ‘the best or nothing’ in every respect.”

The best comes at a price.  And that price is being paid as people seek not only luxury but value.