Most drivers will prefer a more luxury car. This is more or less the case with all items that one can buy. People generally prefer items that are more distinctive, look better, or give them a higher rating. Automotive marketers identified this desire long ago and introduced brands and models that we call aspirational.
Premium car brands are the answer to motorists’ desire to drive a more exclusive machine. It started with some famous 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 run of premiums
One strategy to move upmarket is for the automaker to have a dedicated segment for premium models. Audi, Alfa Romeo, Cadillac, Lincoln, and more recently Lexus, Acura, Infiniti, and Genesis, find themselves occupying that role as options for consumers looking for a bit more luxury.
The formula is often simple. A carmaker develops a common platform. The company then uses the underpinnings to create several vehicles for different audiences. Price differences between products mean that people pay more for products from a more specific brand. More expensive models also typically offer more advanced technology, better quality materials and additional powertrain options.
11 Examples of Price Gaps
To understand the price difference between a premium and a mainstream car, I looked at 11 car models from the same automotive corporation and segment, with similar engines and similar equipment. The results are:
1. Alfa Romeo Stelvio vs Maserati Graquel in Italy: The 300-hp Maserati Graquel GT is five percent more expensive than the 280-hp Alfa Romeo Stelvio Veloce. This is the second lowest price difference of all the examples. With a retail price difference of 3,322 euros, wouldn’t there be a problem of inbreeding between the two?
2. Skoda Fabia vs Audi A1 in Germany: The Audi A1 S-Line competes with 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 much to upgrade from a Skoda to an Audi?
3. Hyundai Grandeur vs. Genesis G80 in South Korea: Hyundai’s Calligraphy trim has a 290-hp engine. The Genesis packs a 304-hp powerplant in Sport Package trim. The premium cousin costs 33% more!
4. Ford Expedition vs. Lincoln Navigator in the United States: The two have the biggest price gap, with the Lincoln in Black Label trim being 40 percent more expensive than the Ford in the Timberline grade.
5. Toyota Venza vs Lexus NX in the US: A consumer can buy a gasoline-powered Venza Limited with 219 hp for $40,253. If a buyer wants a premium model, the Lexus NX 250 Luxury with 203 hp is priced at $45,700. This is an increase of 14 percent.
6. Peugeot 3008 vs. DS 7 in Germany: Although Stellantis would like to position the DS as one of three premium brands in its stable, the difference between the 300-hp PHEV versions of these C-SUVs is only one percent. is quite low. Peugeot is the GT trim, while the DS is the GT Pack grade.
7. Volkswagen Touareg vs Porsche Cayenne in Germany: Volkswagen and Porsche SUVs have shared platforms for years. The Touareg R PHEV is available with 462 hp for 90,995 euros. The Porsche Cayenne Platinum PHEV with the same power is 102,901 euros.
8. Honda Civic vs. Acura Integra in the US: The recently refreshed Acura Integra is the Civic’s premium sibling and is 20 percent more expensive than the more basic model.
9. Chevrolet Traverse vs. Buick Enclave vs. Cadillac XT6 in the US: This is a near-luxury offering and a mainstream model versus a premium one. All of them have petrol engines producing 310 hp. The XT6 Premium is 13 percent more expensive than the Luxury Enclave Premium, which is 6 percent more expensive than the Traverse Premier.
10. Skoda Octavia vs Volkswagen Golf vs Audi A3 in Germany: Popular hatchbacks from the Volkswagen Group are priced very differently. With 110-hp gasoline engines, the A3 Advanced is 15 percent more expensive than the Golf Life. 8 percent more than the VW Skoda Octavia Active.
11. Opel Mokka-e vs DS 3 E-Tense in Italy: The price difference also exists in the electric segment. The DS 3 So Chic with 136 hp is 39,880 euros before incentives. This is 13 percent more than the price of the Opel Mokka-e Edition with the same power.
The author of the article, Felipe Munoz, is an automotive industry expert. In JATO Dynamics.