Are Consumers’ Demand For Luxury Interiors Driving Prices Up?

In an age of living a luxurious life, even for those living well beyond their means, we’re seeing prices gradually moving up, pinching middle class consumers in the process. The automotive market is one of those industries in which we’re witnessing the inflation of car prices. Vehicles that shouldn’t be priced any higher than $16,000 – $18,000 are nearing $20,000+, and consumers are beginning see how buying a 1-2 year old used car is a better fiscal decision than walking into the dealer and driving off the lot in a brand new car. But are consumers partially to blame for the uptick in vehicle prices?

Europeans are known to prefer luxury and driving experience over flat-out performance, which is why European auto makers produce more expensive cars that capture the very best in what the automotive world has to offer. Over the years we’re seeing this trend beginning to grow in the United States as flat-out performance is not selling as quick as luxury, something Cadillac refuses to see as they’re marketing performance first and their sales figures are dropping because of that. Muscle cars have made a slight rebound with the emergence of the Dodge Charger and Challenger Hellcats, the new fastback Ford Mustang, and the Chevrolet Camaro which will be sporting a new look next year.

If you’ve been to car shows recently you’ve noticed that interiors of low-end cars now have an upscale appeal. The Mazda3 and Mazda6 have very comfortable and luxurious interiors, which is a slight shock considering that they’re not a luxury brand. The Honda Civic EX-L, priced around $25,000, has an amazing interior, and if you forget about the engine that it has, you’d have to say that it’s a very impressive car. This leads me to the Toyota Yaris, which some trims cost near or exceed $19,000. That’s absolutely outrageous as this is the Hyundai Elantra GT’s price range territory. True, it gets less gas mileage than the Yaris, but why buy a micro hatchback when you can buy a full size for the same price?

The interiors and their infotainment systems are partially to blame, but so are the consumers. Bluetooth, navigation systems, electric sunroofs, touch displays, and premium cloth or leather seats all factor into the price. The reason why cars like the Honda Fit and Toyota Yaris are considered economical cars is because they’re supposed to be cheap while also offering great gas mileage. Not in 2015. While you have the option to buy the base model, $16,000 is still no drop in the bucket either. Which raises the question as to why consumers would buy new in this current market? Leasing offers have become more appealing than buying, and you actually end up with a better car for 24-36 months than if you bought a car for $18,000.

The luxurious lifestyle is great, but are we living way beyond our means? The Mazda3 was once affordable, a rival to the Ford Focus. Now a top trim Mazda3 is impeding on the Chrysler 200’s territory. For those who do have the money to buy a $25,000+ car, this is a great time to buy. Instead of spending $40,000 on a Mercedes Benz or BMW, you can get an upscale interior for a fraction of the cost. In the sure sense of practicality, a top trim Mazda3, Subaru Impreza Premium, or a Honda Civic EX-L is a much better option, and you don’t break the bank buying a car that offers every infotainment system on the market.

Car companies have their reasons for spiking the prices of cars, but consumers’ demands for luxury interiors and infotainment systems have been a cause for more expensive cars that were once affordable. Whatever happened to the days when we’d get in our cars, turn on the radio, roll the windows down, and enjoy the driving experience? Owning a luxury car is by no means a bad thing, but we’re continuously outdoing ourselves by demanding luxury in cars that are nowhere close to being upscale.

Is Luxury Taking On A Whole New Meaning In The Automotive World?

If someone walked up to you fifteen years ago and said that Subaru, Honda, Mazda, and Toyota were making four door sedans that rivaled the Germans, would you believe them? Or better yet, if that same person told you Audi, Mercedes Benz, and BMW were offering smaller vehicles with starting prices near $30,000, would you think they were joking? The reality is, in the year 2014 the Subaru Legacy, Honda Accord and Civic, Mazda 6, and Toyota Camry and Avalon are all on par with German luxury vehicles, but for a fraction of the cost. While the big three German auto manufacturers are entering the cheaper luxury markets, the Japanese and even the Americans are meeting them with top notch vehicles that might make you question your bias towards a certain car brand.

The fact that any car can have an LCD monitor, leather seats, a spacious interior, and great fuel economy, really begs the question on whether it’s worth spending $10,000 – $20,000 more to get the same package and luxury you’d find on what used to be inferior car brands. For many, the dream of owning a Mercedes Benz or BMW will never go away, but when we were kids, who could have foreseen a Honda, Toyota, Mazda, or Subaru with a luxurious interior? What was once exclusive to those who were affluent, can now be found on most cars that were seen as average. Luxury really has taken on a whole new meaning, but it doesn’t stop there. Performance is also another feature that can be found on four door sedans that were 15 years ago, a family oriented vehicle.

You can own a Subaru Legacy with a 265 horsepower V6 engine for around $32,000, almost $8,000 less than the Audi A4 that has a turbocharged four cylinder engine with 220 horsepower. I must ask the question again, is it worth spending the extra $8,000 on an Audi when you can own a Subaru with the same comforts and styling? The Chrysler 200 has a V6 option which supplies a whopping 295 hp, completely blowing away any of the Japanese or German four door sedans in the price range of $30,000 – $35,000.

But at the end of the day, all the driver really wants is reliability with a combination of some form of luxury, and Honda, Mazda, Subaru, and Toyota can offer that. These brands speak for themselves as they’ve been known for reliability for years, but now that they’ve put in nicer interiors, leather seats, and performance for competitive prices, it’s hard to see why you’d pay extra for a car that offers the same. The only major difference is the badge on the front of the car and the recognition that brand has that catches the eyes of bystanders.

Heading into 2015, the consumer is going to have a boatload of options in the four door luxury sedan market in the $30,000 – $35,000 price range. Luxury is what you make it; the auto manufacturers are just making cars that help steer you into their direction. Owning an Audi, Mercedes, or BMW is a major feat, but when you see cheaper options that may offer more, it’s hard to say no.