The Luxury Car Industry – How the Economy Has Changed Over the Past 10 Years

MINI Cooper S inspired by Bentley Interior

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The word luxury has always had a certain mystical aura about it. Any time you purchase a luxury item whether it’s a Hermes bag or a BMW 6 Series, it has the psychological effect of making you feel like you belong in an elite class.

However, luxury is not just about owning a pricey item , but rather the overall experience of acquiring and using the item- from the minute you step into the dealership, to the service you receive post-purchase. When cars first came on the market, simply owning a car demonstrated wealth and status. But as cars became an affordable household item, specific makes and models of cars were created to target the wealthier population where a person’s social status was defined not so much by the fact that they had a car, but by the make of car they drove.

Luxury in a car was defined by its size, the space available, and the level of comfort it provided. Other factors associated with a luxury car aside from a higher price tag, are things like the engineering mechanisms inside the car; the style, the design, and the options offered which are all of a superior quality.

However, the era of the luxury car has changed significantly over the years and the distinction between luxury and affordable is becoming blurred, as features that were once only available on higher end cars are now being offered in lower end cars as well. They are known as the Premium Compact Segment cars, a new category of cars that blend both worlds and is aimed at people who want to have a ‘luxury’ brand without paying the high price tag.

Premium cars like a BMW 3 Series or Audi A4 are popular because aside from being a ‘luxury’ brand, they are seen as a symbol of upper middle class success. Some luxury car companies are stand-alone, such as the likes of BMW and Mercedes, while others are part of a subsidiary of a more affordable brand, like Lexus and Toyota. These cars are great because while they offer similar features they are more affordable in every way, for instance, car insurance for a Mini Classic than for the Wolseley Hornet, the luxury version of the Mini Classic.


The introduction of low-end versions of luxury cars, often with a similar look and feel, has enabled the common man to afford something he can be proud of and this has had a positive effect on the economy. The last two decades has seen a noticeable slump in the automotive industry, but over the last few years with some restructuring and revamping, the industry seems to be on track for bouncing back successfully.

This change in the industry over the last decade is also a positive factor for manufactures and distributors who provide electrical content, parts and automotive interiors to car companies.

The challenge now is to maintain the momentum of car buying which might become more difficult as prices rise, salaries shrink and jobs are cut. But luxury companies like Mercedes are tackling those issues by producing cars like the GLK, which is very competitive price wise when compared to SUVs like the Ford Explorer, but comes with the prestige of a Mercedes or the 1 Series BMW hatch back, which was rolled out last year.

As the current owners of premium cars age and go into their late 30s and 40s, they will be progressing within their chosen careers and will look to upgrade their premium cars for the pricier, more luxurious, flagship cars like the Mercedes E-Class or the BMW 7 Series.

In summary, the future looks bright for the luxury car industry.