Why So Many People Are Suddenly Buying Luxury Cars
Luxury cars are becoming more attainable for the average person.
This article is more than 2 years old
In the United States, vehicle ownership is a core aspiration for many. Whether one has the means to purchase a car outright or elects to finance one monthly, owning a car is the primary way people in the vast majority of the country get around. Historically, most buyers would gravitate towards more modest vehicles, unable able to afford higher-priced luxury cars. However, recently there has been a shift as more and more people are suddenly buying up luxury automobiles.
Over the past few years, sales for high-end vehicles made by the likes of BMW, Mercedes Benz, and others have ballooned. According to the Wall Street Journal, the market share for luxury cars has reached 17.3% in the United States. This has increased by 3% compared to just three years earlier.
So why are more people suddenly deciding to dish out the big bucks to own a luxury car? It could be, perhaps, that more individuals have just gotten more frivolous with their spending. Thinking along those lines, the pandemic’s presence did serve to usher in an overarching “you only live once” attitude. Thus, perhaps making frivolous purchases seem more justifiable to many. However, the reason why so many people are choosing luxury cars over other brands is actually much more measurable than a shift in attitude. More people are buying up luxury cars because they have more money to spend. “The wealth is growing, and so the luxury market is growing,” observed Alain Favey, who is a board member at Bentley Ltd.
What’s more, is that some industry experts believe that the pace at which luxury cars are gaining market share could actually be faster than what is observable at present. Car companies are still recovering from the supply chain disruptions and deficits that they have been struggling with for years now. As such, inventory for all vehicles has remained far below what it usually is. Thus, some individuals looking to purchase luxury cars may not have, simply because they couldn’t find one to buy. “The records could’ve been higher if they weren’t supply-constrained,” said JD Power analyst Tyson Jominy.
Another factor fueling the trend of people buying up more luxury cars is the fact that prices for traditionally more affordable cars have exploded in recent years. Cars, in general, are getting more expensive. They are getting a lot more expensive. The fact that people are seeing these price jumps could be looking at what they get for the money and then comparing that to what they could get if they paid just a little bit more. In the end, folks just may be seeing more value in opting for the bigger-ticket car.
It’s also worth noting that financing options have become more elongated in recent years. In the past, 5 years was typically the maximum amount of time you could finance a car for. However, now, it’s not uncommon to see financing options for 8 years or more. When you spread a loan out for longer, the monthly payments become cheaper. Hence, a car that was unattainable years ago for someone is suddenly attainable. Consequently, you have more people in the pool able to buy up luxury cars.
