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Luxury Vehicles - US - June 2010

This report explores the luxury automotive market in the U.S. It provides insight into the external and internal factors affecting sales, consumption, trends and what these may mean for future sales, promotional campaigns and industry innovations.

Specific questions that are answered in this report include, but are not limited to, the following:

  • What are the segments of the luxury vehicle market and which ones are enjoying success?
  • How is the definition of “luxury” shifting for the U.S. car market?
  • Which luxury brands are dominating the market and what is the market share between import and domestic vehicles?
  • What components of luxury vehicles do consumers value the most and which ones compel them to spend?
  • What companies are working to innovate the luxury market?
  • Is the concept of “hybrid luxury” a sustainable one and what companies are doing it best?
  • How do consumers research luxury vehicles so they are directed to the ones they eventually purchase?
  • What are consumer perceptions regarding luxury vehicles and how are they affecting purchasing?
  • What media are industry leaders using to deliver effective marketing campaigns, and what actions need to be taken to improve visibility?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Luxury vehicle sales declined 14% in the first five months of 2010
                      • Segment threatened by entry-level luxury by non-traditional brands
                        • Luxury automakers responding by offering series of smaller vehicles
                          • Fuel economy top priority for those purchasing luxury
                            • Luxury automakers respond by offering more fuel efficient series
                              • Luxury vehicles have limited appeal to mainstream car buyers
                                • How a car performs, looks more important than recommendations
                                  • Luxury market emphasizes quality components, nameplate prestige
                                    • Luxury automakers loyal to Buick; Euro luxury preferred by top earners
                                      • Luxury automakers offering shorter loan terms, lower finance rates
                                        • China’s booming auto market providing growth for luxury automakers
                                          • Helping jumpstart Chinese market demand
                                          • Insights and Opportunities

                                            • Create specialized insurance programs that cover luxury components
                                              • Retrain sales personnel to emphasize personal touch with luxury buyers
                                                • Pit crew approach to efficiently, timely servicing appeals to luxury buyers
                                                • Inspire Insights

                                                    • Trend: Premium and Cutthroat
                                                      • Paradox or not, premium and budget seem to co-exist
                                                        • Vehicle brands can provide taste of luxury through affordable entry points
                                                        • Market Size

                                                          • Key points
                                                            • Luxury vehicle sales suffer 20% drop in 2009
                                                                • Figure 1: Total luxury vehicle sales at current prices, 2007-09
                                                                • Figure 2: Total luxury vehicle sales, at constant 2009 prices, 2007-09
                                                            • The Changing Face of Luxury: A Perspective

                                                              • Segment Performance

                                                                • Key points
                                                                  • Luxury market emphasizes quality components, nameplate prestige
                                                                    • Price differentiates luxury vehicle segments
                                                                      • Figure 3: Mean selling price (MSP) of luxury vehicle segments, 2010
                                                                    • Luxury categories can also include SUVs and light trucks
                                                                    • Segment Performance—Entry-Level Luxury

                                                                      • Key points
                                                                        • Entry-level luxury targets loyalty of non-traditional luxury consumers
                                                                          • Non-traditional luxury brands getting into market through lower price points
                                                                          • Segment Performance—Mid-Luxury

                                                                            • Key points
                                                                              • Mid-luxury vehicles more associated with comfort than turbo speed
                                                                              • Segment Performance—High-End Luxury

                                                                                • Key points
                                                                                  • High-end luxury segment nears $100K range
                                                                                  • Segment Performance—Ultra-Luxury

                                                                                    • Key points
                                                                                      • Wall Street collapse hurt segment but rebound is expected this year
                                                                                        • Ultra-luxury vehicles continue to have strong emotional value
                                                                                        • Market Drivers

                                                                                          • Luxury automakers offering shorter loan terms, lower finance rates
                                                                                            • Some luxury automakers adopting safety, fuel efficiency messages
                                                                                              • Steel industry raising production costs, passing onto carmakers
                                                                                                • European luxury automakers affected by steel shortages there
                                                                                                  • China’s booming auto market providing growth for luxury automakers
                                                                                                    • Helping jumpstart Chinese market demand
                                                                                                      • General Motors expects sales in China to exceed U.S. sales in 2011
                                                                                                      • Leading Companies

                                                                                                        • Key points
                                                                                                          • Luxury imports continue to dominate market over domestics
                                                                                                            • Ford gains, but its two luxury series suffer
                                                                                                              • Smaller luxury brands enjoy increased sales
                                                                                                                • Figure 4: U.S. unit sales of cars and light trucks, January-May, 2009 and 2010
                                                                                                            • Luxury Domestics

                                                                                                              • Key points
                                                                                                                • Ford Motor Co.: Shuttering Mercury to re-boost Lincoln
                                                                                                                    • Figure 5: Mercury and Lincoln U.S. car sales, 2006-09
                                                                                                                  • General Motors: Buick to chase Asian competitors, Cadillac European
                                                                                                                    • Buick retooled to emphasize beauty
                                                                                                                      • Cadillac retooled to emphasize European-type performance, luxury
                                                                                                                        • Figure 6: Buick and Cadillac U.S. car sales, 2006-09
                                                                                                                    • Luxury Imports

                                                                                                                      • Key points
                                                                                                                        • BMW USA: Hoping to gain on Lexus through future crossovers
                                                                                                                          • Rolls-Royce revives ‘Ghost’
                                                                                                                            • Figure 7: BMW and Rolls-Royce U.S. car sales, 2006-09
                                                                                                                          • Daimler AG: Mercedes-Benz USA investing in small luxury vehicles
                                                                                                                            • Maybach offers custom-built vehicles; almost 50% of sales come from U.S.
                                                                                                                              • Figure 8: Mercedes-Benz and Maybach U.S. car sales, 2006-09
                                                                                                                            • Toyota Motor Co.: Lexus affected by parent company’s recall crisis
                                                                                                                                • Figure 9: Lexus U.S. car sales, 2006-09
                                                                                                                              • Honda Motor Co.: Acura struggling to win consumer enthusiasm
                                                                                                                                  • Figure 10: Acura U.S. car sales, 2006-09
                                                                                                                                • Volkswagen Group: Audi aims for plug-ins and electrics by 2020
                                                                                                                                  • Bentley suffers from aging lineup; sales dropped 49% in 2009
                                                                                                                                    • Figure 11: Audi and Bentley Motors U.S. car sales, 2006-09
                                                                                                                                  • Nissan Motor Co.: Infiniti to launch a high-performance product line
                                                                                                                                      • Figure 12: Infiniti U.S. car sales, 2006-09
                                                                                                                                  • Brand Qualities

                                                                                                                                    • Hyundai uses individualized approach to launch inaugural luxury brand
                                                                                                                                      • Lexus emphasizes heritage in innovating hybrid luxury market
                                                                                                                                        • Toyota adopts retro luxury approach in creating awareness around Avalon
                                                                                                                                        • Innovation and Innovators

                                                                                                                                          • Audi debuts internet hotspot in 2010 A8; testing viability in U.S.
                                                                                                                                            • BMW launches customization program in U.S. to enhance nameplate value
                                                                                                                                              • Finnish company innovates selling hybrid luxury to most affluent buyers
                                                                                                                                                • Selling hybrid luxury to next-generation luxury buyers
                                                                                                                                                  • Selling hybrid luxury to the most affluent
                                                                                                                                                  • Advertising and Promotion

                                                                                                                                                    • Overview
                                                                                                                                                      • Digital media
                                                                                                                                                        • BMW leads social media charge
                                                                                                                                                          • Mercedes-Benz, Hyundai use new iPad to sell luxury vehicles
                                                                                                                                                            • Broadcast media
                                                                                                                                                              • BMW “Joy” campaign combines human emotion and vehicle dynamics
                                                                                                                                                                • Figure 13: BMW ad, 2010
                                                                                                                                                                • Figure 14: BMW ad, 2010
                                                                                                                                                              • Lexus campaign highlights world’s changes since company’s first hybrid
                                                                                                                                                                • Figure 15: Lexus ad, 2010
                                                                                                                                                              • Acura responds to economic concerns by comparing resale value
                                                                                                                                                                • Figure 16: Acura ad, 2010
                                                                                                                                                              • Infiniti relates vehicle design and comfort to nature
                                                                                                                                                                • Figure 17: Infiniti ad, 2010
                                                                                                                                                              • Mercedes-Benz puts universal spin on meaning of “performance”
                                                                                                                                                                • Figure 18: Mercedes-Benz ad, 2010
                                                                                                                                                            • Luxury Vehicle Ownership

                                                                                                                                                              • Key points
                                                                                                                                                                • Nearly three fourths of respondents have never purchased, leased luxury cars
                                                                                                                                                                  • Figure 19: Luxury vehicle brand ownership, by gender, March 2010
                                                                                                                                                                • Luxury ownership likely highest among both young professionals, retirees
                                                                                                                                                                  • Figure 20: Luxury vehicle brand ownership, by age, March 2010
                                                                                                                                                                • Half of households earning $100K+ most likely to purchase luxury
                                                                                                                                                                  • Figure 21: Luxury vehicle brand ownership, by household income, March 2010
                                                                                                                                                              • Type of Luxury Vehicle

                                                                                                                                                                • Key points
                                                                                                                                                                  • Traditional four-door sedan most popular among respondents
                                                                                                                                                                    • Figure 22: Luxury vehicle type, by gender, March 2010
                                                                                                                                                                  • Respondents aged 45-54 most likely to own luxury SUVs
                                                                                                                                                                    • Figure 23: Luxury vehicle type, by age, March 2010
                                                                                                                                                                  • Less affluent respondents prefer two-door coupes
                                                                                                                                                                    • Figure 24: Luxury vehicle type, by household income, March 2010
                                                                                                                                                                • Consumer Spend on Luxury Vehicles

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Nearly half of respondents purchased least expensive luxury option
                                                                                                                                                                        • Figure 25: Consumer spend on luxury vehicles, by gender, March 2010
                                                                                                                                                                      • Middle aged respondents purchase very high-end luxury vehicles
                                                                                                                                                                          • Figure 26: Consumer spend on luxury vehicles, by age, March 2010
                                                                                                                                                                        • Not surprisingly, household income closely linked to vehicle price paid
                                                                                                                                                                            • Figure 27: Consumer spend on luxury vehicles, by household income, March 2010
                                                                                                                                                                        • Essential Features of Luxury Vehicles

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Comfort, performance, and style top list of preferred respondent features
                                                                                                                                                                              • Figure 28: Essential features of luxury vehicles, by gender, March 2010
                                                                                                                                                                            • Young respondents desire newest and best technology
                                                                                                                                                                                • Figure 29: Essential features of luxury vehicles, by age, March 2010
                                                                                                                                                                              • Brand name most important to households earning $100K+
                                                                                                                                                                                • Figure 30: Essential features of luxury vehicles, by household income, March 2010
                                                                                                                                                                            • Consumer Attitudes Toward Luxury Vehicles

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Respondents desire hybrid technology, better fuel economy
                                                                                                                                                                                    • Figure 31: Consumer attitudes towards luxury vehicles, by gender, March 2010
                                                                                                                                                                                  • Recession causes young respondents to reconsider buying luxury
                                                                                                                                                                                    • Perceptions of foreign-made luxury cars reveal generation gap
                                                                                                                                                                                        • Figure 32: Consumer attitudes towards luxury vehicles, by age, March 2010
                                                                                                                                                                                      • Fuel economy concerns highest among those earning $100K+
                                                                                                                                                                                          • Figure 33: Consumer attitudes towards luxury vehicles, by household income, March 2010
                                                                                                                                                                                      • How Consumers Research Luxury Vehicles

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Style and performance guide consumer decisions, many research online
                                                                                                                                                                                              • Figure 34: Consumer research of luxury vehicles, by gender, March 2010
                                                                                                                                                                                            • Influenced by online research, young respondents look to start dialog
                                                                                                                                                                                              • Many older respondents’ minds made up before they choose
                                                                                                                                                                                                • Figure 35: Consumer research of luxury vehicles, by age, March 2010
                                                                                                                                                                                              • Most affluent households most active using a variety of research
                                                                                                                                                                                                  • Figure 36: Consumer research of luxury vehicles, by household income, March 2010
                                                                                                                                                                                              • What Will Persuade Consumers to Purchase Luxury Next?

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • Price top factor limiting respondent purchases of luxury cars
                                                                                                                                                                                                      • Figure 37: What will persuade consumers to purchase luxury next, by gender, March 2010
                                                                                                                                                                                                    • Young respondents expect to purchase luxury as incomes rise
                                                                                                                                                                                                        • Figure 38: What will persuade consumers to purchase luxury next, by age, March 2010
                                                                                                                                                                                                      • Middle-income households waiting for price decline
                                                                                                                                                                                                          • Figure 39: What will persuade consumers to purchase luxury next, by household income, March 2010
                                                                                                                                                                                                      • Race and Hispanic Origin

                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                          • Black and Hispanic respondents more likely to own luxury than whites
                                                                                                                                                                                                            • Figure 40: Luxury vehicle ownership, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Hispanic respondents, typically with larger families, buy luxury SUVs
                                                                                                                                                                                                            • Figure 41: Luxury vehicle type, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Black respondents own lowest-priced luxury cars, Hispanics own highest
                                                                                                                                                                                                            • Figure 42: Consumer spend on luxury vehicles, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Black respondents desire luxury cars with style, technology
                                                                                                                                                                                                            • Figure 43: Essential features of luxury vehicles, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Attitudes of Hispanic respondents reflect growing economic success
                                                                                                                                                                                                            • Figure 44: Consumer attitudes towards luxury vehicles, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Hispanic respondents use variety of research methods
                                                                                                                                                                                                              • Figure 45: Consumer research of luxury vehicles, by race and Hispanic origin, March 2010
                                                                                                                                                                                                            • Black respondents optimistic they will buy luxury in future
                                                                                                                                                                                                              • Figure 46: What will persuade consumers to purchase luxury next, by race and Hispanic origin, March 2010
                                                                                                                                                                                                          • Cluster Analysis

                                                                                                                                                                                                              • Cadillac Cathys
                                                                                                                                                                                                                • Demographics
                                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                                                      • Engineering Ernies
                                                                                                                                                                                                                        • Demographics
                                                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                                                            • Opportunity
                                                                                                                                                                                                                              • Feature Fans
                                                                                                                                                                                                                                • Demographics
                                                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                                                                      • Cluster characteristics
                                                                                                                                                                                                                                        • Figure 47: Luxury vehicle clusters, March 2010
                                                                                                                                                                                                                                        • Figure 48: Consumer spend on luxury vehicles, by luxury vehicle clusters, March 2010
                                                                                                                                                                                                                                        • Figure 49: Features influencing luxury purchasing, by luxury vehicle clusters, March 2010
                                                                                                                                                                                                                                        • Figure 50: Consumer attitudes towards luxury vehicles, by luxury vehicle clusters, March 2010
                                                                                                                                                                                                                                        • Figure 51: Research leading to luxury purchasing, by luxury vehicle clusters, March 2010
                                                                                                                                                                                                                                      • Cluster demographics
                                                                                                                                                                                                                                        • Figure 52: Luxury vehicle clusters, by gender, March 2010
                                                                                                                                                                                                                                        • Figure 53: Luxury vehicle clusters, by age group, March 2010
                                                                                                                                                                                                                                        • Figure 54: Luxury vehicle clusters, by household income group, March 2010
                                                                                                                                                                                                                                        • Figure 55: Luxury vehicle clusters, by Hispanic origin, March 2010
                                                                                                                                                                                                                                      • Cluster methodology
                                                                                                                                                                                                                                      • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                                        • Luxury brand ownership and race and Hispanic origin
                                                                                                                                                                                                                                          • Figure 56: Luxury vehicle brand ownership, by race and Hispanic origin, March 2010
                                                                                                                                                                                                                                      • Appendix: Trade Associations

                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                        • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                                                                                        • Audi of America Inc
                                                                                                                                                                                                                                        • Automotive Aftermarket Industry Association
                                                                                                                                                                                                                                        • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                                                                        • Automotive Oil Change Association (AOCA)
                                                                                                                                                                                                                                        • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                                                                                        • Bentley Motors Limited
                                                                                                                                                                                                                                        • BMW of North America, LLC
                                                                                                                                                                                                                                        • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                                                                                                        • Flickr
                                                                                                                                                                                                                                        • Ford Motor Company (USA)
                                                                                                                                                                                                                                        • Goldman Sachs Group, Inc., The
                                                                                                                                                                                                                                        • Häagen-Dazs
                                                                                                                                                                                                                                        • Hyundai Motor America
                                                                                                                                                                                                                                        • Land Rover North America, Inc.
                                                                                                                                                                                                                                        • Mazda North American Operations
                                                                                                                                                                                                                                        • Mercedes-Benz USA
                                                                                                                                                                                                                                        • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                                                                        • National Automobile Dealers Association (NADA)
                                                                                                                                                                                                                                        • Nissan North America, Inc.
                                                                                                                                                                                                                                        • Porsche Cars North America, Inc.
                                                                                                                                                                                                                                        • Saab Cars North America
                                                                                                                                                                                                                                        • Starbucks Corporation
                                                                                                                                                                                                                                        • Toyota Motor Corporation USA
                                                                                                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                                        • U.S. Department of Transportation
                                                                                                                                                                                                                                        • Volkswagen of America, Inc.
                                                                                                                                                                                                                                        • YouTube, Inc.

                                                                                                                                                                                                                                        Luxury Vehicles - US - June 2010

                                                                                                                                                                                                                                        £3,174.67 (Excl.Tax)