The Rising Popularity of Luxury Automobiles

In 2016, the luxury automobile segment represented nearly 60 per cent of the increase in overall new vehicles sales.

By Larry Lantz Wheels.ca

Dec 13, 2017 3 min. read

Article was updated 6 years ago

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One of the most defining automotive trends in Canada in recent years, aside from the record-breaking number of vehicles sold, is the rising popularity of luxury vehicles.

I am referring to top-tier, mid-level and semiluxury brands. Not exotics, such as Ferrari, Lamborghini, or McLaren, or ultraluxury, such as Bentley or Rolls-Royce.

When I began working in the retail car industry in the mid-1970s, luxury cars were less common. I remember seeing occasional Cadillacs, Lincoln Continentals, Ford Thunderbirds, and Chrysler New Yorkers, to name a few. Mostly people in higher income brackets owned these vehicles.

The majority of vehicles throughout the late 1970s and 1980s fell into the entry-level and mid-size segments. Pickups sold well in rural markets during those decades, but they were not considered luxury vehicles.

Since the early 1990s, the luxury segment has grown steadily. By 1990, it represented slightly more than 3.1 per cent of the new vehicle market, and by 2000, that figure had climbed to nearly six per cent.

Today, luxury automobiles comprise just over 11 per cent of new vehicle sales in Canada. The popular luxury brands from the ’70s and ’80s are still around, of course, but the category has expanded to include names like Acura, Lexus, BMW, Audi, Jaguar, Land Rover, Mercedes-Benz, and Infiniti, among others.

When discussing luxury autos, we must include pickups, SUVs, and crossovers. Cadillac Escalade, Volvo XC90, Porsche Cayenne, Honda Ridgeline, Ford F-150, and Chevrolet Silverado are among the many models equipped with luxury features and amenities

Also Read: The premium mid-size crossover XT5 is already the best-selling vehicle in the Cadillac lineup.

Several factors have contributed to the steady rise of luxury auto brands, including low financing/lease rates, the growing affluence of middle- and upper-income consumers, the abundance of money available to Baby Boomers, and the growing appeal of luxury brands in general.

Some brands have appealed to younger and less affluent buyers by creating smaller SUVs and entry-level versions of their premium vehicles. The belief is that if car buyers enjoy driving an entry-level version of their brand, they might be inclined to move up in the future.

This growing appetite for luxury automobiles among middle-market consumers is part of a larger trend toward a more luxurious lifestyle. Starbucks, Apple, and Michael Kors are premium brands that command higher prices than conventional products, and consumers are willing to pay extra for them.

That same mindset applies to luxury automobiles. Car buyers have strong feelings about their vehicles, and their reasons for buying luxury brands are often complex. The challenge for any luxury brand — whether it is Land Rover, Gucci, or Louis Vuitton — is creating a unique product or experience that will provide an emotional connection to that product (and brand).

For automakers who offer luxury models, that emotional connection boils down to the brand’s prestige and heritage, perceived quality, along with other features, such as enhanced performance, technology, and the ownership/driving experience.

Even automotive brands that do not fall into the luxury category compete with traditional luxury brands in terms of styling, performance, and technology.

For instance, Toyota, Honda, Ford, Chevrolet, and Chrysler have introduced new safety features (forward-collision warning systems with pedestrian detection and automatic emergency braking, adaptive cruise control, lane-departure alert with steering assist) — features that are available on many premium luxury models.

The automotive landscape continues to evolve, and luxury automobile brands have completely transformed the ownership/driving experience in recent decades. I suspect that they will continue to shape the automotive experience for years to come.

This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. Larry Lantz is president of the Trillium Automobile Dealers Association and is a new-car dealer in Hanover, Ont.

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