Most motorists will prefer a more luxurious car. This more or less applies to all the things a person can buy. People generally prefer items that are more exclusive, look better, or give them a higher status. Automotive marketers identified this desire long ago and introduced brands and models that we call aspirational.
Premium car brands are the answer to the desire of motorists to drive more exclusive machines. It started with some of the iconic manufacturers that still exist, such as Mercedes-Benz, Rolls-Royce, and Bentley. Others who have disappeared: Horch (1899-1940), Napier (1900-1924), LaSalle (1927-1940), Stutz (1911-1937), and Isotta-Fraschini (1900-1948).
Long Race Towards Premium
One strategy to move upscale is for automakers to have a special division for premium models. Audi, Alfa Romeo, Cadillac, Lincoln, and, more recently, Lexus, Acura, Infiniti, and Genesis, have found themselves occupying this role as an option for customers looking for a little more luxury.
The formula is often simple. Automakers develop a common platform. Then, the company uses the foundation to create several vehicles for different audiences. The price gap between products means that people pay more for products from more exclusive brands. More expensive models generally offer more advanced technology, better quality materials, and additional powertrain options as well.
11 Examples of Price Differences
To understand the price difference between premium cars and mainstream cars, I looked at 11 car models from the same company and automotive segment, with similar engines and equipment. Here are the results:
1. Alfa Romeo Stelvio versus Maserati Grecale in Italy: The 300-hp Maserati Grecale GT is five percent more expensive than the 280-hp Alfa Romeo Stelvio Veloce. This is the second lowest price gap of all examples. With a retail price difference of 3,322 euros, wouldn’t there be a cannibalization problem between the two?
2. Skoda Fabia versus Audi A1 in Germany: The Audi A1 S-Line takes over from the Skoda Fabia Monte Carlo. Both models have 95 hp and are top-of-the-line trims. The result is that the Audi costs eight percent more, or 1,750 euros. Would you pay this amount to upgrade from Skoda to Audi?
3. Hyundai Grandeur versus Genesis G80 in South Korea: Hyundai has a 290-hp engine in Calligraphy trim. The Genesis packs a 304-hp powerplant in Sport Package trim. Premium cousins cost 33% more!
4. Ford Expedition versus Lincoln Navigator in the United States: Both have the highest price gap, with the Lincoln on the Black Label slashing 40 percent more than the Ford in the Timberline class.
5. Toyota Venza versus Lexus NX in the US: A consumer can buy a 219 hp petrol-powered Venza Limited for $40,253. If buyers want a premium model, the Lexus NX 250 Luxury with 203 hp costs $45,700. This is a 14 percent increase.
6. Peugeot 3008 versus DS 7 in Germany: While Stellantis wants to position the DS as one of the three stable premium brands, the gap between the 300-hp PHEV versions of this C-SUV is quite small, only one percent. Peugeot is a GT trim, while the DS is a GT Pack grade.
7. Volkswagen Touareg versus Porsche Cayenne in Germany: Volkswagen and Porsche SUVs have shared platforms for years. The Touareg R PHEV with 462 hp is available for 90,995 euros. The Porsche Cayenne Platinum PHEV with the same power is 102,901 euros.
8. Honda Civic versus Acura Integra in the US: The recently revived Acura Integra is the premium Civic sibling and is 20 percent more expensive than the more basic model.
9. Chevrolet Traverse versus Buick Enclave versus Cadillac XT6 in the US: This is a mainstream model with an almost luxurious and premium offering. All of them have a gasoline engine that produces 310 hp. The XT6 Premium Luxury is 13 percent more expensive than the Enclave Premium, which is 6 percent more expensive than the Traverse Premier.
10. Skoda Octavia versus Volkswagen Golf versus Audi A3 in Germany: Volkswagen Group’s popular hatchbacks have very different prices. With a 110-hp petrol engine, the A3 Advanced is 15 percent more expensive than the Golf Life. VW is 8 percent higher than the Skoda Octavia Active.
11. Opel Mokka-e vs DS 3 E-Tense in Italy: The price gap also exists in the electricity segment. DS 3 So Chic with 136 hp is 39,880 euros before incentives. This is 13 percent more expensive than the Opel Mokka-e Edition with the same power.
The author of the article, Felipe Munoz, is an Automotive Industry Specialist at JATO Dynamics.