A luxury car is a passenger automobile providing superior comfort levels, features, and equipment. More expensive materials and surface finishes are used, and buyers expect a correspondingly high build quality.
The term is relative and unavoidably subjective, reflecting both objective qualities of a car and the projected and perceived image of the vehicle's marque. Luxury brands rank above premium brands, though there is no clear distinction between the two.
Luxury cars span from sports cars to large saloons and sport utility vehicles. "Compact" luxury vehicles also fill a niche.
Classification standards
Several car classification schemes include a luxury category, such as: Australia: Since 2000, the Federal Government's luxury car tax applies to new vehicles over a certain purchase price, with higher thresholds applying for cars classified as fuel-efficient. As of 2019, the thresholds were approximately AU$66,000 (US$,000) for standard cars and AU$76,000 (US$,000) for fuel-efficient vehicles. Europe: Luxury cars are classified as F-segment vehicles in the European Commission classification scheme. Italy: The term "auto di lusso" is used for luxury cars. France: The term "voiture de luxe" is used for luxury cars. Germany: The term (upper class) is used for luxury cars. Russia: The term ("representative class vehicle", also translated as "luxury vehicle") is used for luxury cars. Rental cars: The ACRISS Car Classification Code is a system used by many car rental companies to define equivalent vehicles across brands. This system includes "Luxury" and "Luxury Elite" categories (along with "Premium" and "Premium Elite" categories). The criteria for a vehicle to be considered "luxury" are not published.
Characteristics
Features Luxury cars have traditionally emphasized higher levels of comfort, performance, and safety. Manufacturers often introduce new safety technologies and comfort amenities on luxury models before they are available on more affordable models. Some brands, like Audi, BMW, and Mercedes-Benz sell lower-priced models under their badge that are smaller or have limited features to expand their market to price-sensitive consumers.
Luxury vehicles can be a status symbol for conspicuous consumption. However, to lessen the theft of the most exotic models in a line, and cater to European luxury car buyers who shy away from being identified with conspicuous consumption, brands offer buyers the option of removing exterior badges that identify the model name or engine size.
The suspension system of most luxury cars is tuned to prioritize ride quality over handling; however, some are marketed as "sports luxury" and have a greater emphasis on handling characteristics, while others seek to strike a balance between the two.
Layout and powertrain Modern luxury vehicles increasingly prioritize ride comfort, cabin refinement, and smooth power delivery.
Traditionally, luxury cars have used a front-engine, rear-wheel drive (FR) layout. Due to improvements in technology, the FR layout is more expensive to produce; however, it allows for larger engines (particularly straight-six, V8, and V12) to be used.
Some American luxury cars during the 1970s through the 1990s switched to a front-wheel drive layout with a transverse engine provoked by the Arab Oil Embargo of 1973 and the 1979 oil crisis, which caused automakers to discontinue many FR platforms in favor of the more economical front-wheel drive (FF) layout. From the early 2000s, several of these American luxury cars reverted to FR layouts.
Since the introduction of the Bentley Continental GT in 2003, additional luxury grand tourers have adopted all-wheel drive.
History
European manufacturers
Before World War II, a wide array of European producers made luxury cars, including Rolls-Royce, Bugatti, Delage, Delahaye, Talbot-Lago, Bentley, Alvis, Avions Voisin, Isotta Fraschini, Horch, Simson, Stoewer, Maybach, Mercedes-Benz, Hispano Suiza, Daimler Company, and Spyker.
France was a leading producer of powerful luxury automobiles before World War II. After World War II, the French government used puissance fiscale tax regulations to encourage manufacturers to build cars with small engines and French motorists to buy them. The Maserati-powered Citroën SM and the Citroën C6 were arguably the last domestic French luxury cars. In the 2010s, some French manufacturers attempted to develop luxury cars; however the lack of a historical legacy hindered these efforts. In 2014, Citroën introduced DS Automobiles sub-brand to market luxury cars.
Pre World War II, intermediate car manufacturers like Renault, Fiat, Opel, Lancia, Škoda, Riley, Praga, Peugeot, Hillman, and Tatra made luxury cars. However, they had to transition to producing economy cars and superminis post-World War II.
Following World War II, Germany emerged as an export powerhouse, building on its success with the Mercedes-Benz brand. Aircraft engine manufacturer BMW began making motorcycles, then assembling small cars, including under license from the Austin Motor Company, and later evolved into the luxury market segment, ultimately acquiring Rolls-Royce Motor Cars in 1998. Volkswagen entered the high-end market by expanding or acquiring additional brands such as Audi, Porsche, Bentley, Lamborghini, and Bugatti.
In the Soviet Union, the manufacturer ZiL (then called Zis) began producing representational limousines in the mid-1930s. In the early 1950s, GAZ joined with the somewhat smaller "Chaika" model range. In 2018, Aurus Motors was established to produce luxury vehicles for the Russian market.
North American manufacturers
The luxury car phenomenon began at the start of the automobile industry, when the wealthy frequently invested in manufacturing such models to gain social prestige. Emphasis was also placed on custom-built coachwork. The 1920s and 1930s were the apogee of production of these very large luxury automobiles by many manufacturers. Significant North American manufacturers from 1910 until 1940 included Auburn, Buick, Cadillac, Chrysler, Continental, Cord, Daniels, DeSoto, Duesenberg, Franklin, Imperial, LaFayette, LaSalle, Lincoln, Marmon, Packard, Peerless, Pierce Arrow, Ruxton, Stearns-Knight, and Stutz. The Great Depression put many luxury car manufacturers out of business.
From 1946 until the late 1990s, Cadillac was the top-selling brand of luxury cars in the U.S., while Lincoln was second. The most successful and long-running model names during this era were the Cadillac DeVille, Lincoln Continental, and the Chrysler Imperial. The Lincoln Mark Series and Cadillac Eldorado were positioned in the personal luxury category, and competition between them continued into the 1990s.
The personal luxury car emerged into mass popularity and affordability as an America-specific category of popularly-priced cars made from the 1950s by the four domestic manufacturers (GM, Ford, Chrysler, and AMC) that reached peak popularity in the 1970s. The cars were stylized, mass-produced two-door coupés or convertibles, relying on standard components. These distinctively styled cars were targeting the needs of individual customers, not an entire family. The longest running model lines were the 1958-1997 Ford Thunderbird, 1956-1998 Lincoln Mark Series, and the 1967-2002 Cadillac Eldorado.
In 1990, American luxury brands dominated, with Cadillac selling over a quarter of a million cars and Lincoln having its best year ever at 231,660 units. However, the market was changing, with an ever-greater acceptance of smaller, more efficient imported luxury brands. At the same time, the domestic manufacturers were downsizing their models with product decisions that backfired on quality and brand respect.
Since the late 1990s, Japanese and German brands have sold the most luxury-type cars in the United States. However, the Cadillac Escalade has led the luxury SUV segment sales in the United States since its introduction in 1998, with the highest sales for 15 out of its first 20 years on the market.
In the 2000s, both Ford and General Motors produced luxury pickups, including the 2002-2013 Cadillac Escalade EXT, the 2002-2003 Lincoln Blackwood, and the 2006-2014 Lincoln Mark LT. During the late 2000s, the Cadillac CTS and Cadillac DTS led to a resurgence in the brand's luxury sedans. The equivalent sedan from the Ford group, the 2008 Lincoln MKS, was also regarded as a significant improvement over previous models. In 2010, BMW was the best-selling luxury vehicle manufacturer by sales, with Audi and Mercedes-Benz the second and third highest selling luxury brands.
East Asian manufacturers
Chinese manufacturer Hongqi was founded in 1958, making it the oldest Chinese luxury car marque. Later entrants emerged, taking advantage of the rise of electric powertrains, with NEV brands such as Nio in 2014, Lynk & Co in 2016, HiPhi in 2019, Zeekr in 2021, and Yangwang in 2023 producing luxury electric and hybrid vehicles.
Japanese manufacturers have been producing luxury cars since the 1950s, including the Toyota Crown (1955–present), Prince/Nissan Gloria (1959–2004), Nissan Cedric (1960–2015), Mitsubishi Debonair (1964–1998), Nissan President (1965–2010), Toyota Century (1967–present), Mazda Luce/929 (1969–1991), and Honda Legend (1985–2021).
Since the 1980s, overseas sales of Japanese luxury cars have increased, thereby challenging traditional European luxury brands.
Several East Asian manufacturers have created sub-brands to market luxury cars. The first of these was the 1986 launch of Acura (a Honda sub-brand), followed by Lexus (Toyota) in 1989, Infiniti (Nissan) in 1989, and Genesis (Hyundai) in 2015.
2008 financial crisis and the Great Recession The 2008 financial crisis and the Great Recession marked the first time since the Great Depression that the luxury car market suffered considerably, something not seen in previous economic downturns. Many such customers saw their net worth decline during this time. For example, some of the steepest drop-offs came at the high end, including the BMW 7 Series and Rolls-Royce Phantom, and in 2010, Mercedes-Benz dropped the price of the W212 E-Class. The unusually sharp decline in luxury car sales has led observers to believe that there is a fundamental shift and reshaping of the luxury automotive market, with one industry official suggesting that the marques no longer command the premiums that they used to and another saying that conspicuous consumption was no longer attractive in poor economic conditions. Additionally, mainstream brands have been able to offer amenities and devices such as leather, wood, and anti-lock brakes, previously found only on luxury cars, as the costs decline.
However, luxury vehicle sales remained relatively high compared to their non-luxury counterparts. This was aided by growing interest in luxury vehicles from emerging markets such as China and Russia.
Sales in the entry-level luxury segment remained strong throughout the GFC, due to prices being lowered to compete with well-equipped non-luxury cars. For example, in Canada, several luxury manufacturers set sales records in August 2009, due mostly to discounted pricing on entry-level luxury vehicles.
Brands
Some auto manufacturers market their luxury models using the same marque as the rest of their line. Others have created a separate marque (e.g., Lexus, launched by Toyota in 1989) or purchased one (e.g., Bentley, by Volkswagen in 1998).
Occasionally, a luxury car is initially sold under a mainstream marque and is later rebranded under a specific luxury marque (for example, the Hyundai Genesis to Genesis G80 as well as the Citroën DS to DS 5).
For mass-produced luxury cars, sharing platforms or components with other models is common, as is the case in modern automotive industry practice.