[Jonathan Fry] Large Luxury Car Sector in Terminal Decline
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Jon Fry
Nov 1, 2005, 7:47:53 PM11/1/05
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According to EurotaxGlass’s, the large, prestige-brand luxury car sector is increasingly falling out of favour with new and used cars buyers, resulting in a sharp decline in registrations and high rates of depreciation. This is in stark contrast to most other prestige car sectors that have seen unprecedented growth in registrations coupled with unrivalled stability in their residual values.
Sales of the four best-selling models in the luxury car class (BMW 7 Series, Mercedes S-Class, Audi A8 and Jaguar XJ) have declined by more than 25 per cent over the past five years. During the same period the prestige car market as a whole has grown very strongly, up by more than 50 per cent. The net result is that the luxury car share of the total premium-brand market has dwindled to just 2.5 per cent.
Falling levels of demand has meant residual values of luxury cars have been hit hard. In 2004 the average trade value of a one-year-old, 12,000-mile car from the sector was 67 per cent of the original list price, but today that has fallen to just 57 per cent. This compares unfavourably to 70 per cent retained value for the typical large prestige saloon (BMW 5 Series, Audi A6, Mercedes E-Class, etc) and 73 per cent for prestige SUVs (Mercedes M-Class, BMW X5, etc).
“A number of factors have contributed to the decline of the luxury car over recent years,” comments Richard Crosthwaite, Prestige Car Editor at EurotaxGlass’s. “There is much more choice in the market than ever before, and many traditional luxury car buyers migrating to prestige-brand SUVs and niche coupe models. We’re also seeing more affordable new luxury cars from the likes of Aston Martin.
“Fundamentally, there has been a sea change in attitude towards the traditional big saloon. It is not considered as desirable as it once was, it has higher running costs than some of the more contemporary alternatives and, crucially, buyers are becoming more aware of the high levels of depreciation.”
Diminishing support for the beleaguered luxury car has even become apparent in the traditional heartland of the sector – the limousine business. “Some of these companies have been transferring their money into the sector below,” adds Crosthwaite. “Vehicles such as the Mercedes E-Class now offer the space they need but the initial outlay and running costs are less, and the residual values are higher.”
Web Sites:
Visit EurotaxGlass's online at www.eurotaxglass.co.uk (trade), www.glass.co.uk (consumer)
Research Material:
About EurotaxGlass’s
William Glass first published Glass’s Guide to Car Values in 1933 and July 2003 marked 70 years of the motor trade’s ‘Bible’. In 2000 Glass’s merged with Eurotax, forming EurotaxGlass’s - Europe's leading supplier of automotive business intelligence across 28 countries. The merger has created a group with unrivalled resources and knowledge.
Today, EurotaxGlass’s offers products and solutions that are essential at every stage of the vehicle lifecycle – from valuation, technical and fleet management data, through to estimating, bodyshop and dealer management systems and web-based services. Recent developments include valuation data for consumers – offered via the Glass’s Motoring Guide website (www.glass.co.uk) – and the pan-European Market Intelligence Service that provides bespoke data and analysis for the industry at large.
Related Articles:
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Posted by Jon Fry to Jonathan Fry at 11/02/2005 12:28:00 AM
Sales of the four best-selling models in the luxury car class (BMW 7 Series, Mercedes S-Class, Audi A8 and Jaguar XJ) have declined by more than 25 per cent over the past five years. During the same period the prestige car market as a whole has grown very strongly, up by more than 50 per cent. The net result is that the luxury car share of the total premium-brand market has dwindled to just 2.5 per cent.
Falling levels of demand has meant residual values of luxury cars have been hit hard. In 2004 the average trade value of a one-year-old, 12,000-mile car from the sector was 67 per cent of the original list price, but today that has fallen to just 57 per cent. This compares unfavourably to 70 per cent retained value for the typical large prestige saloon (BMW 5 Series, Audi A6, Mercedes E-Class, etc) and 73 per cent for prestige SUVs (Mercedes M-Class, BMW X5, etc).
“A number of factors have contributed to the decline of the luxury car over recent years,” comments Richard Crosthwaite, Prestige Car Editor at EurotaxGlass’s. “There is much more choice in the market than ever before, and many traditional luxury car buyers migrating to prestige-brand SUVs and niche coupe models. We’re also seeing more affordable new luxury cars from the likes of Aston Martin.
“Fundamentally, there has been a sea change in attitude towards the traditional big saloon. It is not considered as desirable as it once was, it has higher running costs than some of the more contemporary alternatives and, crucially, buyers are becoming more aware of the high levels of depreciation.”
Diminishing support for the beleaguered luxury car has even become apparent in the traditional heartland of the sector – the limousine business. “Some of these companies have been transferring their money into the sector below,” adds Crosthwaite. “Vehicles such as the Mercedes E-Class now offer the space they need but the initial outlay and running costs are less, and the residual values are higher.”
Web Sites:
Visit EurotaxGlass's online at www.eurotaxglass.co.uk (trade), www.glass.co.uk (consumer)
Research Material:
About EurotaxGlass’s
William Glass first published Glass’s Guide to Car Values in 1933 and July 2003 marked 70 years of the motor trade’s ‘Bible’. In 2000 Glass’s merged with Eurotax, forming EurotaxGlass’s - Europe's leading supplier of automotive business intelligence across 28 countries. The merger has created a group with unrivalled resources and knowledge.
Today, EurotaxGlass’s offers products and solutions that are essential at every stage of the vehicle lifecycle – from valuation, technical and fleet management data, through to estimating, bodyshop and dealer management systems and web-based services. Recent developments include valuation data for consumers – offered via the Glass’s Motoring Guide website (www.glass.co.uk) – and the pan-European Market Intelligence Service that provides bespoke data and analysis for the industry at large.
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Auto | Auto News | Autos | Automobile | Automobiles | Automotive | Automotive News | Brands | Buyers | Car | Cars | Car Prices | Decline | Demand | Depreciation | EurotaxGlass | Growth | Luxury | Luxury Car | Luxury Cars | Market | Markets | Prestige Brand | Prestige Brands | Prices | Residual Values | Sales | Sector | Used Car Buyers | Used Cars | Vehicle | Vehicles
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Posted by Jon Fry to Jonathan Fry at 11/02/2005 12:28:00 AM
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