Luxury car prices keep climbing - $100,000 vehicles hitting the road in droves
When last we saw the Hummer brand, it was in the form of the 2010 H3, carrying a starting price of less than $34,000.
Soon thereafter, General Motors discontinued the gas-guzzling, money-losing brand, as it pursued financial sustainability after its 2009 bankruptcy.
A decade later, the Hummer is making a comeback as an electric pickup – and the initial version will cost more than triple the price of its H3 ancestor.
With a starting price of $112,595, the 2022 GMC Hummer EV Edition 1 will become the latest in a growing line-up of new vehicles that cost more than $100,000.
Excluding ultra-luxury automakers like Rolls-Royce and Ferrari, luxury and mainstream automotive brands are selling 16 vehicles with a starting price of at least $100,000 in the 2020 model year, up from six in 2010, according to car-research site Edmunds.
Eight are from BMW, two from Audi, two from Mercedes-Benz, one from Porsche, one from Nissan, one from Acura and one from Volvo’s new Polestar brand. They range from $102,700 for the BMW M5 to $173,000 for the Mercedes-Benz Maybach.
“That $100,000 mark is no longer reserved for the super high-end luxury vehicles,” said Rebecca Lindland, an auto analyst and reviewer at RebeccaDrives.com.
Longer-term car loans and cheap interest rates are likely aiding the trend to some extent.
Analysts also say new-car buyers are simply less willing than ever to compromise. Paired with automakers that are eager to bolster profits, it’s a recipe for pricey rides.
“People just want more and more, and you think that they’re not going to pay for it, but they find a way,” Edmunds analyst Jessica Caldwell said.
In the past, many buyers were “looking for economy packages – roll-up windows, no air conditioning, or no radio,” she added. “Those days are long gone. And if you are that type of buyer, generally, you’re probably not in the new-car market any longer – you’re probably looking at something on the used market.”
New-car buyers are looking for creature comforts under the premise that it’s “time to reward myself”, said Bob Carter, executive vice-president of sales for Toyota Motor North America, whose Lexus brand sells vehicles that top $100,000, depending on options.
“The consumer’s pushing that demand,” he said. “Right now, the consumer demand is not for base grades.”
The typical economic profile of someone who buys a $100,000 vehicle is, of course, far different than the person who buys a beater. The $100,000 car buyer is more likely to be flush with cash from stock market gains and stable jobs, despite the pandemic.
“These are not people who are constrained and living pay cheque to pay cheque,” said Lindland.
More $100,000 vehicles are on their way. Besides the Hummer, many of them are electric vehicles, such as next year’s Lucid Air Dream Edition electric sedan with a starting price of $169,000, battery range of 503 miles and 1,080 horsepower.
Some vehicles don’t count as having starting prices of more than $100,000, but they are effectively that expensive for many buyers – like the Tesla Model X SUV.
Although the base version of the Model X starts at about $80,000, the performance version starts at about $100,000, and various options, such as interior upgrades and partially self-driving capability, can add tens of thousands of dollars to the price tag.
“Tesla’s demonstrated for years now that people are willing to spend over $100,000 on an electric vehicle with the right cachet, with the right branding, with the right capabilities,” Lindland said.
The price tag is not limited to electric cars, though. In fact, the Hummer could be the first of many pickups to cross the $100,000 threshold. Others are already close — and not just from luxury brands.
GM, Ford and Ram have been hiking pickup prices in recent years by making more sumptuous interiors and adding flourishes to exterior design on trucks like the Ram Laramie Longhorn, the Ford F-150 King Ranch and the Chevrolet Silverado High Country. Heavy-duty versions of the Detroit-Three pickups could be the first ones to cross the six-figure barrier.
The average new-car buyer took out a 70.2-month loan with an interest rate of 4.6% in the third quarter of 2020, compared with an average of 69.6 months and 5.7% interest a year earlier, according to Edmunds. That means it’s easier and more affordable to spread out the cost of a six-figure ride over a longer period of time.
But buyers of expensive vehicles like the $157,500 Acura NSX supercar are less likely to be swayed by small movements in the cost of borrowing.
“If you’re buying an NSX, you’re probably not needing to finance as much,” Caldwell said.