The majority of drivers would prefer a fancier car. It is pretty much the case with all the consumer goods you can buy. We tend to like those that are more exclusive, or simply that look better, and give us a better status. The marketing of cars has well identified this desire and has properly introduced the brands and models that we call aspirational ones.
The premium car brands are the response to this necessity of driving more exclusively. They started with some iconic makers that still exist, such as Mercedes-Benz, Rolls-Royce, Bentley, and many others that disappeared: Horch (1899-1940), Napier (1900-1924), LaSalle (1927-1940), Stutz (1911-1937), or Isotta-Fraschini (1900-1948). They were all conceived as really different and exclusive cars that you would hardly see on the roads.
Today, the situation is quite different. Whilst the traditional luxury brands continue to sit above all, the volume OEMs have created or revived their own premium ones. Audi, Alfa Romeo, Cadillac, Lincoln, and more recently Lexus, Acura, Infiniti, DS, and Genesis, play the role of the richest cousin of the family.
The formula is quite simple: the car makers develop a common platform and then design, develop, and position two or three different cars for different consumers. Therefore, there is a price gap that can make the difference when deciding which car to buy. What is it?
11 examples in consideration
In order to understand the price gap between a premium and a mainstream car, I took 11 examples of cars belonging to the same group and segment, powered by similar engines, and with similar trims. These are the results:
1. Stelvio vs Grecale (Italy): The Maserati Grecale GT petrol with 300 bhp is 5% more expensive than a petrol Alfa Romeo Stelvio Veloce with 280 bhp. It is the second smallest price gap among all the examples. With a retail price difference of €3,322, wouldn’t there be a price cannibalisation problem between them?
2. Fabia vs A1 (Germany): both models with 95 bhp and top-of-the-range trim, with the Audi A1 S-Line petrol against the Skoda Fabia Montecarlo petrol. The result is that the Audi is 8% more expensive, or €1,750. Would you pay this amount to jump from a Skoda to an Audi?
3. Hyundai Grandeur vs Genesis G80 (Korea): The Hyundai powered by a petrol engine with 290 bhp on its Caligraphy trim; the Genesis powered by a 304 bhp petrol engine on its Sport Package trim. The premium cousin is 33% more expensive!
4. Ford Expedition vs Lincoln Navigator (USA): They have the highest price gap with the Lincoln (Black Label trim) 40% more expensive than the Ford (Timberline trim). The Navigator powered by a petrol with 450 bhp vs 440 bhp petrol for the Expedition.
5. Toyota Venza vs Lexus NX (USA): A consumer can get the Venza Limited petrol with 219 bhp for $40,253. If the consumer wants to go premium, the Lexus NX 250 Luxury with 203 bhp will cost $45,700. That’s 14% more.
6. 3008 vs DS 7 (Germany): Although Stellantis wants to position DS as one of the three premium brands of its range, in this case the gap between the PHEV 300 bhp versions of these C-SUVs is quite low, at 1%. The Peugeot on its GT trim, while the DS wears the GT Pack trim.
7. Touareg vs Cayenne (Germany): The Volkswagen and Porsche SUVs have shared everything since their introduction to the market 20 years ago. The Touareg R PHEV with 462 bhp is available for €90,995. The Porsche Cayenne Platinum PHEV with the same bhp is worth €102,901.
8. Civic vs Integra (USA): The recently launched Acura Integra, which I call the fancy cousin of the Civic, is 20% more expensive. The Integra A-Spec petrol with 200 bhp vs the Civic SI petrol with 200 bhp.
9. Chevrolet Traverse vs Buick Enclave vs Cadillac XT6 (USA): a mainstream vs a semi-premium vs a premium full-size SUV. They are all powered by petrol engines with 310 bhp. The XT6 Premium Luxury is 13% more expensive than the Enclave Premium, which is 6% more expensive than the Traverse Premier.
10. Octavia vs Golf vs A3 (Germany): the popular hatchbacks from the Volkswagen Group have different pricing too. Their petrol 110 bhp engines with the entry-trim levels show the A3 Advanced 15% more expensive than the Golf Life. The Volkswagen is 8% more expensive than the Octavia Active.
11. Mokka-e vs DS 3 E-Tense (Italy): the gap is also the case within the electric segment. The DS 3 So Chic with 136 bhp is priced at €39,880 before incentives. This is 13% more than the price of the Opel Mokka-e Edition with the same horsepower.
The author of the article, Felipe Munoz, is an Automotive Industry Specialist at JATO Dynamics.