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Monday, November 24, 2014

Maybach magic: Mercedes readies big, pricey S600

Maybach magic: Mercedes readies big, pricey S600


The new Mercedes-Maybach S600 is not just the biggest vehicle in the German maker's luxury line-up, it will also be the most expensive when it reaches showrooms next year.

But a brisk walk around this year's Los Angeles Auto Show, where the S600 is staging its first public appearance, reveals it is far from unique. There were a few low-end models, such as the compact Honda HR-V crossover making their debut. But high-end luxury and extreme performance models seemed to dominate a two-day media preview.Measuring nearly 18 feet, nose-to-tail, with a passenger compartment better suited to a private jet, the big sedan is expected to begin somewhere north of $250,000, and with extensive customization, some versions are likely to nudge closer to $1 million.
Call it the automotive wealth gap, if you wish. Sales of the industry's highest-priced models are far outpacing the overall automotive recovery in the U.S. In China, luxury vehicles are selling so quickly the country is expected to become the world's largest market for high-line vehicles within the next two years, according to industry analysts.

The surge in demand for premium edition full-size SUVs has pushed the average transaction price for large sport utility vehicles to $48,137 according to Truecar.com. That's an increase of 6.8 percent compared to the same time a year ago. By comparison, Truecar says average transaction prices for all vehicles sold in October were up just 1.1 percent.
Rolls-Royce this year has reported a 39 percent increase in volume, and British rival Bentley is expecting to score an all-time sales record in 2014. It brought to Los Angeles a convertible concept version of its $304,000 Mulsanne. Bentley has said it expects to make real gains when it launches an all-new super-premium SUV about a year from now.
"It's been a while since we've seen this much activity in that (premium and super-premium) space," noted Stephanie Brinley, a senior analyst with IHS Automotive. And it flies in the face of conventional wisdom, coming out of the recession, that "people wouldn't want ostentatious luxury. But what we're seeing is that people who have the buying power for that type of vehicle will step up and pay for it."
And that buying power has become more robust as the wealth gap has broadened to its widest in the past century. A recent survey by The Federal Reserve showed that average income for U.S. families climbed about 4 percent from 2010 to 2013, after inflation, but most of that growth was concentrated among the top 3 percent of Americans. And the automakers are smelling money.
The S600, for example, brings back the Maybach name that Daimler AG abandoned as a standalone brand two years ago. But the maker quickly realized that even with a whopping 18 different models priced above $100,000, it wasn't reaching far enough up-market.
"There is that customer who wants the next step up, and if we don't provide it we might lose them," stressed Steve Cannon, the CEO of Mercedes-Benz USA.
The L.A. Auto Show also saw the debut of the $270,000 Porsche Panamera Exclusive Edition. And Johan de Nysschen, the new global president of Cadillac, said he envisions the need for adding several models to the line-up that would top $100,000, with at least one pushing close to the price of the S600 and Panamera Exclusive.
Not all super-luxury brands are gaining ground, of course. Lamborghini has actually suffered a sales dip this year, but Italian rival Ferrari has a several-year waiting list for some models. An internal debate over the company's strategy of strictly limiting production to boost exclusivity was reportedly a key factor in the recent ouster of Ferrari CEO Luca di Montezemolo.
Brinley and other analysts suggest this automotive wealth gap reflects broader societal trends. Low-end buyers, in particular, are struggling financially. But many have also discovered an alternative to make their cash go further: purchasing so-called certified pre-owned vehicles, rather than new ones.
But even in the mainstream, the push up-market is apparent. Ford added a new Platinum Series to the new Explorer SUV it launched in L.A. (As did Chrysler with the updated 300C sedan.)
"We didn't have enough of an upscale version" of the old Explorer, said Jim Farley, Ford's global marketing director. Buyers would load the previous top-line model up and still want more boxes to check, he said.
For mid-range and low-end luxury models, low interest rates and longer loan terms make it easier to move up-market. But makers say the typical buyer for a Mercedes-Maybach S600 or Porsche Panamera Exclusive will likely pay cash. They're also likely to have a household fleet of as many as seven or more vehicles, according to industry data.

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