Luxury Car Market

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Executive Summary The luxury vehicle industry can be characterized by its monopolistic competition structure with most brands at a mature stage of their product life cycle. There is free entry of products into this industry, which is curtailed only by brand recognition of luxury. Hence there has not been a new brand entering this industry in over 16 years. In the luxury vehicle industry, with vehicles ranging in price from $35K to $75K there are 14 major brands: Acura, Audi, BMW, Cadillac, Hummer, Infiniti, Jaguar, Land Rover, Lexus, Lincoln, Mercedes-Benz, Porsche, Saab, and Volvo. Within each brand there are a range of body types and features which appeal to various consumers. Most brands are known for a key feature such as safety, reliability, performance, high performance, hybrid, sports, or stability. There are attempts to combine features and attract more consumers, drawing them away from the competition. These features can be found in a variety of body styles including the convertible, hatchback, sedan, SUV, coupe, pick-up and station wagon. The typical consumer of a vehicle in this category has an income of $100K, is well educated, and is in their 50’s age-wise. The industry realizes that they need to draw in younger consumers and have been making efforts to do that, making more family friendly vehicles like the SUV. To continue to attract the desired younger consumer, while not offending the traditional luxury vehicle consumer, the luxury market needs to stay current on trends. The primary trend right now is going green using hybrid technology. Hybrid technology is being used in two ways right now: in the mass vehicle industry it is used to create better fuel economy; in the luxury market hybrid technology is focused more on increasing performance without sacrificing standard fuel economy. The new market for luxury would be to have full-hybrid

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