In this the car companies have already made strides. As The Wall Street Journal notes, the thriftiest BMW 3-Series, already on sale in Europe, is a 320d Efficient Dynamics sedan. It has such fuel-savings features as automatic start-stop function (to shut off the engine at stop lights), low-friction tires and regenerative braking that uses braking energy to recharge the battery.
“These allow it to put out just 109 grams of carbon dioxide per kilometre under Europe's mileage-measuring system, which translates to roughly 57 miles per U.S. gallon,” notes Joe White in The Journal.
Going forward, the European luxury brands will introduce high-performance diesels and four-cylinder engines. Mercedes plans to start offering a four-cylinder version of the C Class for 2012, for instance, and BMW has plans for a front-wheel-drive line going forward. The regulators, then, are having their very strong and determined say about the definition of a luxury car and car companies are responding accordingly.
“My own personal belief,” says DesRosiers, “is that as our regulators do their best to take away the attributes consumers enjoy in a vehicle, led by performance variables and followed closely by size and type of vehicle, consumers will adjust and purchase better-appointed vehicles and the luxury segments offer the most latitude for consumers to move up-market if they have to sacrifice size and power.”
Beyond government rules, however, wealth and demographics come into play as factors in the luxury segment; they help shape its growth and what new models will define “luxury” now and in the future. DesRosiers suggests that Canada, despite the global economic situation, continues to enjoy “decent wealth creation, while an aging baby boomer set and a relatively wealthy retiring community will all play into the expansion of the luxury segment.
“As the [luxury]segments expand their definition and introduce all kinds of new product [particularly down-market]there is an excellent chance that luxury will continue a very slow but positive increase in market penetration,” he notes.
Meanwhile, auto makers with an eye to the global luxury market are planning for a world in which 70 per cent of the world’s people live in packed mega-cities and attitudes about car ownership among younger buyers will be as focused on in-car technologies and “green” performance as baby boomers were obsessed with 0-100 km/h times in the 1960s and 1970s.
At both this year’s Tokyo and Frankfurt motor shows, the concept of “mobility” trumped considerations around high-horsepower by a long shot. The idea here is to provide owners with flexible mobility choices, from the use of smartphone apps designed to help with navigating and parking in crowded cities, to electric vehicles of all sorts of shapes and sizes.
So yes, the luxury car market will keep growing. But 20 years from now it will look very different than what we have today – far more different than today’s luxury market differs from that of 20 years ago.
LUXURY BY SEGMENT
According to DesRosiers Automotive Consultants, the various sub-segments of the luxury market differ greatly in a number of ways. Here's a look:
Compact luxury sport-utility
Mercedes Benz has been No. 1 here, in one of the fastest-growing segments in the market, says DesRosiers. This segment grew from 4,000 units five years ago to 19,000 in 2010. Big winner: Mercedes-Benz GLK.
Intermediate luxury sport-utility
The runaway leader here is the Lexus RX, though sales have lagged in the last 18 months.
Large luxury sport-utility
The hugely successful Lincoln MKT and Navigator lead this segment, though it is not one with a lot of growth potential.
Luxury sport car
DesRosiers says this one should be divided into at least three sub-segments, but that said, in 2010 Nissan's 350Z captured the number one spot. Sports cars are in decline, in Canada, in large part as a result of skyrocketing insurance costs. In 2010, 3,657 units were sold here, but DesRosiers points out that at one point at one point Canadians bought close to 9,000 sports cars a year.
On top here is the Mercedes-Benz S-Class. Canadians once bought 25,000 cars here in 2000, but the segment hit an all-time low of 10,000 in 2009, the year the big recession hit hardest. With so many buyers migrating to SUVs and also going down market to save money, this remains a segment in decline.
Small or entry-level luxury
BMW is on top with the 3-Series, though last year the big winner was Audi with an increase of 26.6 per cent and the Ford Five Hundred (up 89.0 per cent ). Compact luxury SUVs such as the BMW X3 and represent 45.6 per cent of luxury sales.