Who Cares About Luxury Cars?

An auto journalist was talking with an executive from a Korean-based carmaker when the subject of luxury cars came up. The Korean marque had just introduced a vehicle that was luxurious and pricey for the brand, and this prompted the journalist to ask if the executive really thought his brand could succeed in selling such a car.

“Yes, I think we can,” the executive said. “Our research told us that buyers of traditional luxury brands are more open to lower-priced alternatives than you might think. What they found once they owned a luxury car was it didn’t change their life.”

Now, new research reinforces that view. Almost 1 in 3 luxury-car owners has a more negative attitude toward purchasing another luxury vehicle in the future, according to a recent survey conducted by TNS, a global market research firm. Since the Korean automaker introduced its own lower-priced alternative to traditional luxury cars, the overall economic situation has turned even more in favor of a switch down. With the unknown future of the European debt crisis, continued economic concerns throughout the U.S. and the potential of slower growth in global auto markets, consumers’ fears are prompting concerns that the past sales growth the luxury-car segment has enjoyed could be over.

Why are well-heeled buyers cooling off on the idea of buying another luxury car? The most common reason cited focuses on their questions and fears regarding the current and future affordability of ownership (74 percent). Some 43 percent cited insurance and maintenance as a pivotal concern for future purchase. This is one big reason why most luxury-car manufacturers are offering “free maintenance” plans these days.

“Clearly the high visibility of the recent debt crisis and the ensuing mayhem in the financial markets is causing negative sentiment toward the luxury-vehicle segment,” says William Bruno, vice president of TNS. “What is most telling is the similar level of negative attitudes expressed by a large portion of existing luxury-vehicle owners, as well as non-owners who aspire to own luxury vehicles.”

The research also suggests that many current luxury-car owners and those who might aspire to luxury-car ownership aren’t as financially secure as one might perceive. According to the survey, 19 percent of luxury-vehicle owners who showed negative attitudes toward purchase cited the lack of fuel economy in most luxury brands as being the reason they were shifting away from the luxury segment.

“The high focus on fuel economy is surprising to us because, according to our research, many luxury brands offer competitive gas mileage when compared to similarly equipped, non-luxury midsized vehicles,” says Bruno. “The overall perceptions aren’t matching up with reality, and this is a great opportunity for marketers and manufacturers to continue demonstrating the real economics associated with luxury brands.”

Worrying about what the neighbors will think was also a reason that was given for avoiding or putting off a luxury-car purchase, the survey found. Some 13 percent of respondents cited an inappropriate or out-of-tune image as being the main reason for steering clear of buying a luxury-brand vehicle. When times are tough, many consumers don’t want to appear to be flaunting their relative wealth by buying an expensive luxury car.

New Economy Standards Provoke Controversy

European observers have to wonder what the Americans are up to when it comes to fuel economy. For decades, European countries have limited their use of petroleum by instituting stiff taxes on motor fuel. This takes a big chunk from the earnings of every European driver, but it also cuts down on fuel usage in a fairly direct manner. In contrast, Europeans who understand the American system for curbing petroleum use, the federal Corporate Average Fuel Economy (CAFE), are struck by its obtuseness. And now the Obama administration is poised to kick CAFE into overdrive, proposing a 56-mpg fuel economy requirement by 2025. Should the regulations be imposed, the world’s automobile companies will have to figure out a way to not only build vehicles that can deliver 56-mpg performance, but also persuade enough Americans to buy them. Auto industry experts agree that the latter is much more difficult to accomplish than the former.

In making the new proposal, the U.S. government has spread the word that the proposed standards, which almost double the current requirements, can be achieved simply by adding cost in the vehicle-manufacturing process. Some hybridization here and there and, bingo, cars can meet the new standards. It has also taken the line that the additional costs involved in manufacturing and marketing vehicles that can achieve the drastically higher fuel economy ratings -- costs that presumably will be passed on to consumers -- will be recouped by those same consumers from the cost savings that will accompany higher fuel efficiency.  The story is that consumers will pay more for the vehicle upfront, but they will get that money back in gas savings. Independent observers question how realistic that is, though, because there are several items that the proposal’s proponents either miss entirely or gloss over.

For example, buyers will be forced to pay more for new vehicles than they otherwise would have had to pay for the new, more fuel-efficient technology, but the payback period for that added expense will likely extend well beyond the typical ownership cycle. They’ll pay more initially; that’s clear. But when, or if, they will get that money back is decidedly unclear. The payback period will depend on fuel prices. If fuel prices are $3 per gallon (inflation-adjusted), then the payback period will be far longer than if fuel prices are $5 per gallon. What should be clear is the higher purchase prices for new vehicles will have a significant negative effect on overall demand. If you kick up the price of the average new car by $2,500 -- roughly 10 percent -- it will clobber demand for new vehicles. What happens when demand for new vehicles diminishes? You don’t have to be a Rhodes Scholar to figure out that fewer new cars will be built and sold, and because of that, a number of men and women involved in the manufacturing, marketing and sale of new cars will suffer economically. There is little doubt many will lose their jobs. In reaction to the higher prices for new cars, consumers will continue to drive their current vehicles longer, meaning the new regulations will, in essence, keep older, less-fuel-efficient and higher-emission vehicles on the road longer. The values of used vehicles will go up, making it more difficult for low-income consumers to buy any cars at all.

So, despite the rosy predictions that the higher fuel economy standards are a win-win, there is virtually no doubt that both consumers and the car industry will be hurt if the higher standards are instituted. Those familiar with the European model wonder why Americans don’t simply institute dramatically higher fuel taxes if the goal is to curb fuel use. The answer is that politicians lack the will to do that because it would jeopardize their chances of re-election. Instead, they continue to shift the burden to the car companies and to consumers.

Cars Talking to Cars Is Next Safety Wave

If you want to save American consumers some gasoline, invent something that will prevent cars from crashing into each other. According to Texas Transportation Institute’s (TTI) 2010 Urban Mobility Report, traffic congestion wastes nearly 3.9 billion gallons of fuel annually. That costs the average commuter an additional 49 hours spent sitting in traffic, and the extra 39 gallons of gas (worth $1,112) per driver that idle time requires. Leading factors in traffic delays are caused by accidents, breakdowns and road debris, TTI says, so if you get rid of accidents and you communicate more rapidly in the event of vehicle breakdown, you will save the country billions of gallons of gas. The good news is that the industry is working on the problem, and one of the solutions is to enable cars to communicate with one another while they are sharing the road.

We recently had the opportunity to participate in an event sponsored by Ford Motor Company that demonstrated how intelligent vehicles that wirelessly talk to each other could be effective in reducing crashes. Ford built functioning prototypes of intelligent vehicles and took the show on the road to exhibit the value of the technology. In cars so equipped, it was immediately obvious that the technology could have far-reaching benefits, and safety experts agree. An October 2010 report from the National Highway Traffic Safety Administration (NHTSA) said the potential safety payback of vehicle-to-vehicle communication could help in as many as 4.3 million police-reported light-vehicle crashes annually. That’s approximately 81 percent of all light-vehicle crashes involving unimpaired drivers. You can see why Ford is so gung ho about the future of intelligent vehicles.

“Intelligent vehicles are the next frontier of collision avoidance innovations that could revolutionize the driving experience and hold the potential of helping reduce many crashes,” says Sue Cischke, Ford group vice president of sustainability, environment and safety engineering.

Ford’s vehicle communications technology allows vehicles to talk wirelessly with one another using advanced Wi-Fi signals for dedicated short-range communications on a secured channel allocated by the Federal Communications Commission. Unlike radar-based collision-avoidance features, which identify hazards within a direct line of sight, the Wi-Fi-based radio system allows full-range, 360-degree detection of potentially dangerous situations, even when a driver’s vision of the other vehicle(s) is obstructed. Cars that talk to the other cars can sense their presence around a curve, over a hill or behind a wall, even when you can’t see them from the driver’s seat.

Because of this critical aspect of the intelligent cars system, a driver could be alerted if her vehicle is on path to collide with another vehicle at an intersection, when a vehicle ahead stops or slows suddenly, or when traffic changes on a busy highway. The systems could also warn drivers if there is a risk of collision when changing lanes or approaching a stationary or parked vehicle, or if another driver loses control.

Preventing deaths and injuries is, of course, the greatest benefit of the system, but the other big plus is the fuel- and time-saving. By reducing crashes, intelligent vehicles could ease traffic delays. A network of intelligent vehicles and infrastructure could process real-time traffic and road information to allow drivers to choose less congested routes.

“We are not far from the day when vehicles will operate like mobile devices with four wheels, constantly exchanging information and communicating with our environment to do things such as shorten commute times, improve fuel economy and generally help us more easily navigate life on the road,” says Paul Mascarenas, vice president and chief technical officer of of Ford Research and Innovation. “A smart network of intelligent vehicles has the potential to benefit drivers in many ways.”

What Is the Best Chevy of All Time?

In a Chevrolet-commissioned poll, nearly 125,000 Chevrolet fans cast their votes and named the 1969 Camaro the “Best Chevy of All Time.” As part of Chevrolet’s centennial celebration, which is kicking up toward an October climax, Chevrolet devotees were asked to vote for their favorite vehicle from the proud brand’s 100-year history. During the four-round elimination bracket that resulted in the final decision, the 1969 Camaro garnered 25,058 of the 124,368 votes cast, edging out the 1970 Chevelle SS in the final round.

Tom Peters, Chevrolet design director, had no quarrel with the decision. He believes the ’69 Camaro is not only one of the best vehicles in Chevrolet’s history, but also one of the best vehicles ever. He is a little biased, however, having owned the same 1969 Camaro for nearly 20 years.

“I can vividly remember seeing one for the first time as a kid,” says Peters. “The intent of the Camaro was instantly understood, even to a 14-year-old like me, because it possessed a very powerful personality and an elegant, simple design. The Camaro was so cool because it offered this great style, high performance -- and yet was attainable for someone just getting out of school.”

We at Driving Today have an affinity for the 1969 and other early Camaros as well, but we also think there are other Chevrolet models of the past that could also be worthy of the title “Best Chevy of All Time,” and none of them is the 1970 Chevelle. (Let’s be serious.) Here are our picks for four other worthy contenders. With them and the Camaro, you have what are, in our opinion, the top five Chevrolets.

1916 Chevrolet 490

In the era when the Ford Model T was the dominant low-priced car, Chevrolet came to market with a middle-class six-cylinder that was more than twice as expensive as Henry Ford’s brainchild. But founder William C. Durant quickly changed Chevrolet’s course to meet the Model T head-on. The 490 got its name from its base price, $490, a figure that happened to be $5 less than that of the then-dominant Ford. The shift in strategy made the Chevy what it is today: one of the world’s most popular low-priced cars.

1936 Chevrolet Suburban Carryall

Now we see SUVs everywhere. But before the 1936 Chevrolet Suburban Carryall arrived on the scene, that vehicle type was unheard of. Of course, nobody in Depression-era America called the Suburban an SUV, but its unique blend of a station-wagon body style on a truck chassis created a new market segment. Not only that, but -- except for the World War II years in which all civilian-vehicle production stopped -- the Chevy Suburban has been built and sold every year since.

1955 Chevrolet

The Chevrolets of 1955 may well be the most beautiful series of sedans, coupes, hardtops, convertibles and station wagons ever built. Each version is simple, handsome and classic. But styling isn’t the only claim to fame the ’55 Chevy boasts. 1955 was also the year the Chevrolet brand introduced the incredibly long-lived small-block V-8 engine, which supplemented the veteran inline six. The small-block V-8 is, arguably, the best mass-produced automobile engine ever produced, while the ’55 Chevy in all its forms is still highly prized by collectors.

1963 Corvette Sting Ray

What is the best Corvette of all time? Ask 10 Corvette fans and you’ll get 10 different answers. But most will have to agree, when prompted, that the ’63 Corvette Sting Ray -- especially in its split-window coupe form -- deserves that honor. To the efficiency and sheer power of its small-block V-8 engine, the Sting Ray added an independent rear suspension that brought it into the realm of true supercars at a fraction of their lofty prices. It’s a formula that continues to guide Corvette today.

So do you have a favorite Chevrolet model that you feel deserves to be in the Chevy top five? Tell us about it. We might even agree with you.

Top 5 Vehicles for Ski Week

Over the past several years, a new vacation week has been making its way onto many families’ calendars. Sometimes sanctioned by school districts and sometimes not, this new week -- which is usually tucked deep into February or early March -- is commonly called Ski Week. Embedded in two months known primarily for their dreary weather, the holiday has become a welcome relief to families across the country, offering them a chance to exercise some muscles that may otherwise fall into doldrums during the long, cold winter.

Of course, if you are going to make the best use of Ski Week, you need a vehicle that can get you up the mountain and back down again in style, comfort and safety. To help you identify the finest Ski Week vehicles, our editors have put their collective minds together to highlight the ones we believe are the best of the best.

Jeep Grand Cherokee
Certainly the word Jeep has a ringing connotation when it comes to all-weather, four-wheel-drive vehicles, so it should be no surprise that the Jeep Grand Cherokee is on this list. All-new for 2011, it was one of Chrysler’s final collaborations with former owner Daimler-Benz, and the heritage is obvious. Unlike several others on this list, the Grand Cherokee will seat just five, not seven or eight -- but those five will find a cabin as rich as a luxury SUV and a level of refinement that has hit a high-water mark for the brand. Powered by a newly designed 290-horsepower 3.6-liter V-6, and boasting Jeep’s well-honed inclement-weather capabilities, the Grand Cherokee is a consensus pick as a Ski Week vehicle.

Honda Pilot
While the Jeep Grand Cherokee is to many an obvious choice as a Ski Week vehicle, the Honda Pilot is far less so. But having experienced its considerable virtues during a ski vacation blizzard as recently as this past Christmas, we can attest to the fact that the Pilot has all the features it needs to get to and from a snowbound resort. With flexible seating for up to eight, and with more cargo room than you may guess, the Pilot is great for family transport. Its 250-horsepower V-TEC V-6 delivers ample power, and its four-wheel-drive system is both robust and sophisticated.

Ford Explorer
Back in the ’80s, the Ford Explorer was the lead vehicle in the rise of the SUV segment. Now, nearly three decades later, it has been completely transformed from a truck-based vehicle to a unibody crossover -- while still retaining and enhancing its four-wheel-drive credentials. The complete makeover was instituted to deliver better handling and higher fuel economy, and it was a success on both counts -- so successful that it was recently named North American Truck of the Year. Its fuel economy tops the segment, despite the fact that its 3.5-liter V-6 offers a robust 290 horsepower, and its easy-to-operate all-terrain system takes the worry out of off-road situations.

Audi Q7
Audi was very late to introduce a crossover SUV, which baffled many people because of its long history creating great vehicles with its patented Quattro all-wheel-drive systems. The good news is that when Audi did introduce its Q7 crossover, it got it right. This is a vehicle that features Audi’s beautifully tailored interior and exterior design -- combined with a large dose of practicality. For instance, the seats can be arranged 28 different ways, and there are 72 cubic feet of cargo space. The Q7 relies on supercharging to bring its 3-liter V-6 up to 272 horsepower, but it is accompanied by a sophisticated 8-speed Tiptronic automatic transmission and Quattro all-wheel drive.

Chevrolet Tahoe
Crossovers are nice. They offer good driving dynamics and a reasonably compact size. That being said, when it comes to spending Ski Week with the family, there is a lot to like about a full-sized, truck-based SUV like the Chevrolet Tahoe. The interior is significantly roomier than in the above-cited crossovers, yet fuel economy is only a mile-per-gallon or so poorer. The Tahoe is not as nimble as the others on this list -- but with 320 horsepower from its 5.3 V-8, the Tahoe has the hauling ability to get you and all your gear to the lifts and back in limousine-like comfort.

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