Although there is no clear-cut definition of the term "luxury car", it is often used to refer to a vehicle segment that demands a higher price for providing excess features going beyond the necessary considerations for normal use. The luxury car segment was originally created to target customers who were interested in displaying their ostensibly higher social status by purchasing vehicles that were conspicuously more expensive and of higher quality.
The rise in electric mobility is set to change the marketLuxury car brands are known to organize as solo companies (i.e. Tesla) or as a subsidiary of a larger automaker, such as Lexus of Toyota. Some of the leading premium car brands include Daimler's Mercedes-Benz, Toyota's Lexus, Volkswagen's Audi, and BMW. BMW, Lexus and Mercedes-Benz were the leading luxury car brands in the U.S. in 2020, each recording sales volumes well over 274,000 vehicles that year, and holding a similar share of the market at over 13.5 percent each. The United States represented less than a quarter of BMW’s regional automobile sales in 2020, while the brand was the market leader in the country.
In parts due to a rise in interest for electric mobility, Tesla reported a rapid growth in 2021. Its vehicle deliveries for the first three quarter of the year surpassed those for the full 2020 financial year. Its global brand value soared by a 184 percent increase compared to 2020, making it the fastest growing brand across all industries.
Luxury brands are well perceived by car ownersAlmost half of all U.S. car owners had an annual income below 75,000 U.S. dollars in 2021, while the average price for luxury cars stood at an estimated 76,300 U.S. dollars. While the U.S. was comparatively the largest market for luxury automobiles, full-sized luxury vehicles only represented three percent of car owners’ primarily used cars that same year. U.S. consumers did not pay particular importance to luxury or premium vehicles. Only 17 percent of a sample of the U.S. population affirmed buying premium or luxury cars, motorcycles, or bicycles, despite brand awareness for these products reaching 32 percent.
While luxury vehicles as an overall segment might not appeal to the U.S. consumers, luxury automotive brands are amongst the ones perceived as most reliable by car owners. At 71 percent, Toyota’s subsidiary Lexus was the third most reliable car brand for car owners in late 2020. Lexus was also second in overall consumer satisfaction a year later, followed by luxury car sales leader BMW, and with Audi and Mercedes-Benz close behind.