Luxury cars have become terribly common, potentially expensive

[LoudPipes]

Luxury cars have become terribly common, potentially expensive

Date May 26, 2015
Michael Pascoe
BusinessDay contributing editor


Accelerating: New Porsche 911s now sell in bigger numbers than the Volkswagen Beetle that originally spawned it.


It seems the "C" in Mercedes-Benz C class sedan stands for "common": there are more of them being sold this year than Ford Falcons. Include the C class coupes and there are more than Falcons and Toyota Aurions combined.

That says as much about the decline of the Aussie family car as the rise of Mercedes' Car of the Year, but Mercedes overall has lost any claim of being an exclusive brand. More Berlin taxis than Hondas are being driven out of our showrooms.

It's not just Mercedes. Australian sales of the obvious German rivals, BMW and Audi, are booming, too. That's partly thanks to cheaper entry-level models, but also to lower interest rates and fuel prices promoting an extraordinary willingness to splurge on expensive new cars when consumers are supposed to lack confidence and the economy is soft.


C-class models like Mercedes-Benz's C200 are now more commonly bought than much humbler vehicles like the Toyota Aurion or Ford Falcon.


I'll come to a problem building in that for many buyers – and an opportunity for those who are more patient – but first marvel at our new-found indulgence in flashy metal.

Mercedes passenger car sales in the first third of the year are up by 21 per cent, BMW 16 per cent, Audi 14. Total Mercedes vehicle sales, including SUVs and vans, were 11,474 units, up 23 per cent.

But that sort of sales growth is stuck in the slow lane compared with the supercars fanging it down the centre line. The fastest growing segment of the Australian vehicle market is "sports cars over $200,000". Dealers sold 527 vehicles in this category, 30 per cent more than last year.

The breakdown of the Federal Chamber of Automotive Industries figures for the first four months of the year confirm new vehicle sales are going gangbusters, on track for a record high – and that's before any rush for cheap utes pre-June 30.

Who cares about utes though when the most expensive cars are growing fastest? In the first four months, Lamborghini sales were up 820 per cent to 46 units. Ferrari sales, 64 of them, were up 107 per cent. Maserati sales quadrupled to 177.

Porsche 911s are a bit pedestrian in this company, but April was a good month for them as 43 were sold, taking the year-to-date total to 148 – up a modest 7 per cent.

While 911 sales growth wasn't speedy, Porsche overall sold 1293 of its V-dubs-on-steroids, 62 per cent more than this time last year. As an exclusivity measure, new Porsche 911s this year are more common than new VW Beetles (78 sold) and Golf cabriolets (114).

By stark comparison, there have been 2029 Falcons bought in the first four months and just 956 Aurions. The increasingly-common Mercedes C class? Try 3264 (the new model up 102 per cent on the old) plus 731 coupes.

Sales of all Merc passenger cars were up 21 per cent to 8126. Sales of all Ford passenger cars were down 41 per cent to 7022. The three-pointed star is leaving the blue oval in the dust.

Sales of all locally manufactured vehicles were down 9 per cent to 28,995 – only 8 per cent of the 359,250 total sales.

If the industry beats the 2013 sales record of 1.136 million, Australians will have purchased nearly 5.5 million new vehicles in five years – rather amazing for a mature market with a population that averaged about 23 million people over that period.

The rise in popularity of the more expensive marques is not limited to Australia. The US is experiencing the same boom with a recent Bloomberg story Low Rates Mean You Can Now Get a Mercedes with a Chevy Income. The story carried the telling subhead: "But should you?"

"This is a tempting time to be a lover of cool cars. Thanks to lease offers, low interest rates, and low gas prices, it's gotten dangerously easy to drive off the dealer lot with a brand new luxury car.

"Buying a used car is almost always a better deal over the long term than buying or leasing a new one. That's the classic personal finance advice, and it still applies. But in recent years the irresponsible choice has gotten a lot more enticing."

Auto loan interest rates tend to feature more prominently in American car selling and are more enticing than the local offerings. And then there's the oil price:

"Gas prices have also tumbled. That has little direct impact on car buyers, but it has a psychological one, says Bloomberg Intelligence senior auto analyst Kevin Tynan. When prices are high, consumers tend to be more conservative. Now that they're low, drivers can feel like using their savings to upgrade their wheels."

Perhaps that's what's happened to the missing petrol price dividend in Australia. Some retailers have complained that consumers haven't been spending the cheaper fuel windfall in their shops – maybe they're too busy buying Masers.

The looming problem for buyers of new wheels though is the greater depreciation that will come with a more crowded used-car market in three years' time when the leases on many vehicles will hit the balloon.

That's the great extra cost of buying a new car – the eye-watering drop in worth as soon as the rubber meets the road. The scarcity value of luxury models has cushioned some of that pain, but it looks like they won't be so scarce along Parramatta road come 2018.

Which is where opportunity knocks for the more patient. However tempting that new thoroughbred might look today, it could be a bargain if you wait a while.


Footnotes of random facts of possible interest to those inclined:

The rise in luxury car sales is all the more remarkable because total passenger car sales are going backwards – the overall growth is in SUVs with a smaller contribution from light commercials.

Passenger car sales were down 10.3 per cent last month and are off 4.4 per cent for the year so far with private, business, government and rental sectors all negative. SUV sales were up 17 per cent for the month and 15.7 this year. In the first third of last year, car sales of 171,344 led SUVs by 63,442 units. This year, the gap has narrowed to 38,889 with 124,885 SUVs sold.

Light commercial sales are up a more modest 4.3 per cent to 61,410. Intriguingly, private sales are where the growth is in this category, up 15.5 per cent to 24,888 units while business sales are down 3.3 per cent. Bring on Happy Joe's sub-$20K van sale for small businesses.

The FCAI figures also provide a fascinating breakdown of 25 countries from which we import vehicles. We bought 2686 Argentine-made vehicles in the first four months, up 6.2 per cent – turns out that delightful but benighted country of rampant protectionism and bad governance is where the VW Amarok is made.

And how the once-mighty Swedes have fallen. We only bought 170 vehicles that were made in Sweden, just ahead of the 155 from Portugal.

Japan is our biggest source with 107,803 vehicles (down 1 per cent), but second-place may be a surprise to those who don't follow the impact of somewhat-free trade agreements and cheaper labour closely: Thailand, with 75,994 units (up 14 per cent). Korea took bronze with 40,762 ahead of Germany's 28,626.

And I have a theory about what is most likely to kill off a model in the Australian market. Of the extraordinarily long list of vehicles sold here this year and last, the following are models that went sale-less in April: J1, Up!, Almera, Corsa, Gen.2, S16, Roomster, Insight, Tilda, Astra, Persona, Fluence, Volt, C30, Insignia, V50, Maxima, Legend, M, Q70, Vito Wagon, Zafira Tourer, Viano, 1 Series coupe/convertible, CR-Z, 207 convertible, Eos, C70, 3 Series coupe/convertible, IS250C, XK, SLS-Class, Aero.

What I suggest they mostly have in common is really dumb names. Seriously, they were trying to sell something called a Roomster. No wonder the Up! is out. How do you drop into a conversation that you're driving an IS250C – it sounds like a standard for toaster wiring – or avoid the suspicion that Fluence suggests flatulence. Heavens knows how the Tilda lasted as long as it did, testimony to the rental car industry's willingness to put punters into any name of whitegoods at a price. Oh sweet Cedric!

http://www.smh.com.au/business/comme...26-gh9v6e.html

[new2ford]

Ford and Holden ending their local models leaves no choice but to step sideways to Europe if you want a practical, well-designed driver's car or crossover with fantastic dynamics. Their future offerings from USA or South Korea are completely uninspiring. No choice but to fork out more dough for a good car.

I had a couple of BMW salesmen telling me recently how Ford was absolutely insane for knocking off the Territory, it was such an outstanding car and showed how well Australians could do and thanks Ford for delivering them customers!

Re Roomster I'd say Yeti has knocked that off - an own goal by Skoda.

I think the brightest light in the Ford stable ATM is the Mondeo. Not sure about Spanish manufacturing standards but maybe they've improved. The Everest with its Australian design also looks good, at least on paper.

[AndyXR6T]

It's a no brainer in my eyes. People not only want comfort and styling but also tech and features. What features people use to consider on early model luxury cars are now expected to be 'ordinary' cars of our time now. You have the conservative consumer that will complain that too much tech etc just sounds expensive and you hear the phrase "just more things that can go wrong with it", but in this day and age the tech in cars isn't that expensive anymore. Just time for other manufacturers to step up their game.

[rancidpunx]

Originally Posted by AndyXR6T

It's a no brainer in my eyes. People not only want comfort and styling but also tech and features. What features people use to consider on early model luxury cars are now expected to be 'ordinary' cars of our time now. You have the conservative consumer that will complain that too much tech etc just sounds expensive and you hear the phrase "just more things that can go wrong with it", but in this day and age the tech in cars isn't that expensive anymore. Just time for other manufacturers to step up their game.

Agreed. I see new cars every day for work and this is exactly what I am seeing. The Koreans started to throw all the features at their cheap cars and the Euros followed suit. They are more expensive but people are finding ways to get into that market. I have many customers with 3 Series and C class Mercs who crossed shopped a Falcon but have consciously down sized for the Euro and the status it brings. Similar money but you get a hell of a lot more and be a snob about it.
In this market now Ford have to give up the Bare Minimum business model and start to have making features standard across the range. Kuga and Ranger without Sat Nav or reverse camera in 2015 etc?

[xxx000]

it shows just how wealthy we really are overall despite the gloom and doom talk by some politicians and some media

[cheap]

Often hear about people picking up a "bargain" 5 year old luxury/sports Euro cars. Original sticker price +$200,000, they paid $70,000. Or the original owners who hold to their luxury drives beyond the 3-5 year warranty. They soon realise that spare parts and maintenance are priced commensurate to a +$200,000 car. This is the trap that awaits many.

[cheap]

Originally Posted by xxx000

it shows just how wealthy we really are overall despite the gloom and doom talk by some politicians and some media

It is an illusion based on housing prices perpetually going up, easy finance with very low interest rates. Ask the people from the mining towns how easy things can change. Many people are doing it tough.

[Squalo]

^ Agreed. We as a society are not wealthy at all... the top 10 percent maybe, but not the rest of us.

What we are seeing is the result of a decade or two of 'aspirational' attitudes. In other words, everyone deserves the best, and by god they'll have it one way or another.

Back in the day, you bought an Alfa or a BMW when you'd 'arrived'. In other words, you'd put the effort in, climbed the social ladder, earned the rewards.

Now you just go out and buy it because that's how you earn your social status these days. Via consumerism.

[new2ford]

Originally Posted by cheap

They soon realise that spare parts and maintenance are priced commensurate to a +$200,000 car. This is the trap that awaits many.

Like a Jeep?

Seriously though, what you do owning a Euro past warranty is to network into the many excellent specialist mechanics around. You don't stay with the dealer.

[SumoDog68]

Sales of all Merc passenger cars were up 21 per cent to 8126. Sales of all Ford passenger cars were down 41 per cent to 7022. The three-pointed star is leaving the blue oval in the dust.

I don't think Mercedes is outselling Ford ...

[SumoDog68]

Originally Posted by new2ford

Ford and Holden ending their local models leaves no choice but to step sideways to Europe if you want a practical, well-designed driver's car or crossover with fantastic dynamics. Their future offerings from USA or South Korea are completely uninspiring. No choice but to fork out more dough for a good car.

I had a couple of BMW salesmen telling me recently how Ford was absolutely insane for knocking off the Territory, it was such an outstanding car and showed how well Australians could do and thanks Ford for delivering them customers!

Re Roomster I'd say Yeti has knocked that off - an own goal by Skoda.

I think the brightest light in the Ford stable ATM is the Mondeo. Not sure about Spanish manufacturing standards but maybe they've improved. The Everest with its Australian design also looks good, at least on paper.

It is interesting that you leave Japanese made cars out of your equation as they are by far the biggest supplier to Australian market.
Ford didn't knock off Territory , Ford is pulling out of local manufacturing and Territory won't be updated. There will be replacement for it down the track .
Car salesmen talk a lot of crap sometimes , X5 is a completely different price bracket to a Territory.

[Sam_Boss260]

Originally Posted by cheap

Often hear about people picking up a "bargain" 5 year old luxury/sports Euro cars. Original sticker price +$200,000, they paid $70,000. Or the original owners who hold to their luxury drives beyond the 3-5 year warranty. They soon realise that spare parts and maintenance are priced commensurate to a +$200,000 car. This is the trap that awaits many.

I think this is the relevant point here. owning a luxury car is one thing, but being able to maintain it properly is another. And if you go around to build that 'network' parts are still expensive. My best mate is in the car business and always recommends that for BMW, Audi, Volvo, Mercedes, as soon as the warranty goes or at around 80,000kms to get rid of the car, unless you are willing to start forking out a couple grand per year on things that go wrong. e.g. 2009 5 series Beemer that is having a gearbox play up is costing the owner up to $10k. So what does do? Flips the car of course.

[new2ford]

Originally Posted by SumoDog68

It is interesting that you leave Japanese made cars out of your equation as they are by far the biggest supplier to Australian market.

Read my first sentence again!

I've had an old cheap second hand BMW for a while as a "test mule" for owning a second hand Euro and I have to say that my experience is nothing like what's being said above. Good specialist mechanic plus access to much lower cost parts. These guys network (even internationally) like you wouldn't believe.

Plus it's been very reliable, rescuing us a few times when the Ford has "failed to proceed". We call it the "lifeboat"!

[cheap]

Originally Posted by new2ford

Like a Jeep?

Seriously though, what you do owning a Euro past warranty is to network into the many excellent specialist mechanics around. You don't stay with the dealer.

Jeeps are special, they're potential disasters waiting to happen as they sit on the yard, once you leave the yard (assuming your Jeep can actually leave the car yard) the potential is realised

Seriously, dealers labour charges hurt, but prices of ECU's, sensors, Turbos, ABS or any number of "essential peices of equipment" on a second hand luxury Euro, world of pain. Make sure you're sitting down.

[Sabantien]

My hire car when I was in the US was a C-class (I wanted a mustang or charger, but their only car with GPS was the merc). Craps all over my G6E. I don't blame people for buying them over a Falcon.

[Boosh Brus]

Originally Posted by cheap

Seriously, dealers labour charges hurt, but prices of ECU's, sensors, Turbos, ABS or any number of "essential peices of equipment" on a second hand luxury Euro, world of pain. Make sure you're sitting down.

The ABS box I bought for my Euro was $266 USD. I was sitting down when I ordered it so maybe that is how I missed the world of pain.

[Sam_Boss260]

Originally Posted by new2ford

I've had an old cheap second hand BMW for a while as a "test mule" for owning a second hand Euro and I have to say that my experience is nothing like what's being said above. Good specialist mechanic plus access to much lower cost parts. These guys network (even internationally) like you wouldn't believe.

Plus it's been very reliable, rescuing us a few times when the Ford has "failed to proceed". We call it the "lifeboat"!

I would consider yourself lucky then. Can't count how many stories I've heard first hand from people that are like this;

- 2009 VW Passat Wagon, gearbox shat itself completely just under 4 years. Guys had to trade the car
- 2008-ish Audi A4 wagon, turbo went. Parts alone was something like $4.5k. Traded the car

yes a network and good local mechanic can save on labour and small parts, but turbos, gearboxes etc are expensive.

[cheap]

Originally Posted by Boosh Brus

The ABS box I bought for my Euro was $266 USD. I was sitting down when I ordered it so maybe that is how I missed the world of pain.

So, just to confirm you own a +$200,000 Euro, and you bought an ABS for it for at $266. Sounds incredibly good.

[Express]

New2ford is correct.

There are spare parts suppliers that specialist in euro parts.

If you check out the Mercedes forum for example you will find parts sellers who supply genuine Mercedes-Benz parts for a fraction of the dealer price and they ship worldwide.

There is also a host of quality aftermarket spares, upgrades and go fast parts available for Euros both from Germany and the USA and these parts will also be much cheaper than the dealership stock.

For example a genuine diff centre for a C63 fitted from the dealer is about $12,000, an aftermarket Quaife LSD which is the preferred diff used by the racers will cost around $4,000 fitted.

If you are using a non-dealer who specialises in Euros to service and repair your car they will already have tapped into these supply chains and repairs are nowhere near the price some people want you to believe.

I’ve said it before, my AMG is cheaper to maintain then my HSV.

[Boosh Brus]

Originally Posted by cheap

So, just to confirm you own a +$200,000 Euro, and you bought an ABS for it for at $266. Sounds incredibly good.

No, I think it was $86,000.
If I did own an ex $200,000 Euro I would probably still be sitting down when I order the parts from the US. A quick search shows second hand Porsche 911 Turbo ABS controllers from $80 USD. My ABS controller was new and genuine though.

Originally Posted by Express

New2ford is correct.

There are spare parts suppliers that specialist in euro parts.

If you check out the Mercedes forum for example you will find parts sellers who supply genuine Mercedes-Benz parts for a fraction of the dealer price and they ship worldwide....

I agree. A new non OEM ECU for a BMW or Volvo is about $475 + $100 for programming.

[Spammy]

I have owned a number of prestigue Euros and some observations:

- none of them have had rust from day one due to really bad paintwork
- none of them have had knocking noises from day one due to very poorly designed suspension
- none of them have had the rear suspension flog out after 70,000 km of easy driving around the 'burbs.
- none of them have had mystery issues with power windows and warning lights
- the dealers fix things under warranty without trying to wriggle out by saying "they all do that"


I could go on......

[Cav]

Why do we need auto headlights, auto wipers, adjacent lane warning, wander over white line warning, yadda, yadda, yadda.

Oh and why if you don't have a warning light for seat belts in the rear seats the car will not get a 5 star rating.

The car world has gone mad.

More stuff to go wrong.

[Spammy]

Originally Posted by Cav

Why do we need auto headlights, auto wipers, adjacent lane warning, wander over white line warning, yadda, yadda, yadda.

.

How is that Beta video recorder going? Did you see Ansett have a special on flights Syd/melb this week...only $999 return ?

[BA GT-HO]

Always the same old lines trotted out about Euro cars

'Oh once it breaks down you will pay! I knew a friend of a friends, dogs, cousins room mate who had to pay $14,000 for a new part coz its a Euro car!'

Well guess what, how many of us that own local cars go and pay the stupid 'genuine part' prices at the dealer when something breaks on the car (and usually breaks far more often being a local car). If you do your an idiot. There are always cheaper ways, the magic of the internet.

God help you if you are still under warranty, the local dealers won't want to know you.

[Wretched]

Originally Posted by BA GT-HO

Always the same old lines trotted out about Euro cars

'Oh once it breaks down you will pay! I knew a friend of a friends, dogs, cousins room mate who had to pay $14,000 for a new part coz its a Euro car!'

Well guess what, how many of us that own local cars go and pay the stupid 'genuine part' prices at the dealer when something breaks on the car (and usually breaks far more often being a local car). If you do your an idiot. There are always cheaper ways, the magic of the internet.

God help you if you are still under warranty, the local dealers won't want to know you.

Not only that, a few of the parts on the local cars are actually not made here and are shared with these Euro cars too.

[blueoval]

I must admit, the thought of the 'out of warranty' repairs and maintenance is what scared me out of buying a Euro car. But if what some of you guys are saying is true, I just need to research on the net for equivalent parts at a fraction of the cost and get a trusted repairer to fit it?

[SumoDog68]

Originally Posted by BA GT-HO

Always the same old lines trotted out about Euro cars

'Oh once it breaks down you will pay! I knew a friend of a friends, dogs, cousins room mate who had to pay $14,000 for a new part coz its a Euro car!'

Well guess what, how many of us that own local cars go and pay the stupid 'genuine part' prices at the dealer when something breaks on the car (and usually breaks far more often being a local car). If you do your an idiot. There are always cheaper ways, the magic of the internet.

God help you if you are still under warranty, the local dealers won't want to know you.

I guess you own an an X5 ? Didn't think so :-)
Reality is generally between the two extremes. Big $$ euros out of warranty can be financial liability . Fault finding complex electronic / mechanical systems cost time , equipment and ultimately money.
Why do you think there are specialist euro brands mechanics if anyone can fix them through Magic of Internet ?
Once geartronic or DSG packs up, there are not many options and they are all costly . Not to mention bmw plastic cooling systems .
Nice cars when they work but upkeep cost more on average than local or Japanese car.

[SumoDog68]

Originally Posted by blueoval

I must admit, the thought of the 'out of warranty' repairs and maintenance is what scared me out of buying a Euro car. But if what some of you guys are saying is true, I just need to research on the net for equivalent parts at a fraction of the cost and get a trusted repairer to fit it?

First you need to know which part(s) - trouble shooting is the hard part of the equation :-)

[Express]

Originally Posted by blueoval

I must admit, the thought of the 'out of warranty' repairs and maintenance is what scared me out of buying a Euro car. But if what some of you guys are saying is true, I just need to research on the net for equivalent parts at a fraction of the cost and get a trusted repairer to fit it?

I’ll help you get started.

Here’s a couple that advertise on a well know MB forum.

Pelican Parts
Click on the manufacturers names at the top and then year and models.

http://www.pelicanparts.com/catalog/...10_catalog.htm

Here’s a biggie.

MB Online Parts
Known by MB owners worldwide for discount OEM parts.

http://mbonlineparts.com/splash/index.cfm?siteid=215843

And the more you search the more you’ll find and then start looking into the aftermarket and the list becomes very extensive.

http://weistec.com/

http://ultimatepd.com/

http://www.kleemann.dk/

[Trump]

Originally Posted by Express

I’ll help you get started.

Here’s a couple that advertise on a well know MB forum.

Pelican Parts
Click on the manufacturers names at the top and then year and models.

http://www.pelicanparts.com/catalog/...10_catalog.htm

Here’s a biggie.

MB Online Parts
Known by MB owners worldwide for discount OEM parts.

http://mbonlineparts.com/splash/index.cfm?siteid=215843

And the more you search the more you’ll find and then start looking into the aftermarket and the list becomes very extensive.

http://weistec.com/

http://ultimatepd.com/

http://www.kleemann.dk/

If the local Euro dealers don't adapt soon, they will be extinct as the new parts paradigm will capture the entire market (yes, even the really well to do set). How they (BMW dealers) can justify $253 p/h as their labour rate I have no idea.