Most motorists would prefer a more luxurious car. This is more or less the case for all items that someone can buy. People generally prefer goods that are more exclusive, look better, or give them higher status. Automotive marketers identified this desire a long time ago and introduced the brands and models we call aspirational.
Premium car brands are the answer to this desire for motorists to drive a more exclusive machine. This started with some iconic manufacturers that still exist, such as Mercedes-Benz, Rolls-Royce, and Bentley. Others that have disappeared: Horch (1899-1940), Napier (1900-1924), LaSalle (1927-1940), Stutz (1911-1937), and Isotta-Fraschini (1900-1948).
The Long Race to Premium
One strategy to move upmarket is for an automaker to have a dedicated division for premium models. Audi, Alfa Romeo, Cadillac, Lincoln, and, more recently, Lexus, Acura, Infiniti, and Genesis, find themselves occupying this role as the option for customers looking for a bit more luxury.
The formula is often simple. An automaker develops a common platform. Then, the company uses the underpinnings to create several vehicles for different audiences. A price gap between the products means that people pay more for the product from the more exclusive marque. The more expensive models generally offer more advanced tech, better quality materials, and additional powertrain options, too.
11 Examples of Price Differences
To understand the price gap between a premium and a mainstream car, I looked at 11 car models belonging to the same automotive corporation and segment, with similar engines and similar equipment. Here are the results:
1. Alfa Romeo Stelvio versus Maserati Grecale in Italy: The 300-hp Maserati Grecale GT is five percent more expensive than the 280-hp Alfa Romeo Stelvio Veloce. It is the second-lowest price gap of all the examples. With a retail price difference of 3,322 euros, wouldn't there be a cannibalization problem between the two?
2. Skoda Fabia versus Audi A1 in Germany: The Audi A1 S-Line takes on the Skoda Fabia Monte Carlo. Both models have 95 hp and are the top-of-the-line trim. The result is that the Audi costs eight percent more, or 1,750 euros. Would you pay this amount to upgrade from a Skoda to an Audi?
3. Hyundai Grandeur versus Genesis G80 in South Korea: The Hyundai has a 290-hp engine in the Caligraphy trim. The Genesis packs a 304-hp powerplant in the Sport Package trim. The premium cousin costs 33% more!
4. Ford Expedition versus Lincoln Navigator in the United States: These two have the highest price gap, with the Lincoln in Black Label trim 40 percent more expensive than the Ford in the Timberline grade.
5. Toyota Venza versus Lexus NX in the US: A consumer can buy the gasoline-powered Venza Limited with 219 hp for $40,253. If a buyer wants the premium model, the Lexus NX 250 Luxury with 203 hp costs $45,700. This is an increase of 14 percent.
6. Peugeot 3008 versus DS 7 in Germany: Although Stellantis would like to position DS as one of the three premium brands in its stable, the gap between the 300-hp PHEV versions of these C-SUVs is quite small at just one percent. Peugeot is the GT trim, while DS is the GT Pack grade.
7. Volkswagen Touareg versus Porsche Cayenne in Germany: Volkswagen and Porsche SUVs have shared platforms for years. The Touareg R PHEV with 462 hp is available for 90,995 euros. The Porsche Cayenne Platinum PHEV with the same power is 102,901 euros.
9. Chevrolet Traverse versus Buick Enclave versus Cadillac XT6 in the US: This is a mainstream model against a near luxury offering and a premium. All of them have gasoline engines making 310 hp. The XT6 Premium Luxury is 13 percent more expensive than the Enclave Premium, which is 6 percent more expensive than the Traverse Premier.
10. Skoda Octavia versus Volkswagen Golf versus Audi A3 in Germany: The Volkswagen Group's popular hatchbacks have very different prices. With 110-hp gasoline engines, the A3 Advanced is 15 percent more expensive than the Golf Life. The VW is 8 percent more than the Skoda Octavia Active.
11. Opel Mokka-e vs DS 3 E-Tense in Italy: The price gap is also 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 Specialist at JATO Dynamics.