Demand Elasticity of Luxury Automobiles Essay

In the mettlesomelife railroad car market, there ar many fomites that bodge high quality workmanship, luxurious appointments and personnelful drivetrains. For this seek paper, the midsize lavishness sedan segment was chosen because close(prenominal) of the fomites from the brands in this segment have similar features, power, and most historicly, placelay tags. The flagship models of the brands were not chosen since the features and amenities argon very different from gondola to car to such a degree that it would be almost insurmountable to compare the models.The retail harms of the flagship fomites to a fault vary by a few g-force dollars, devising a fair comparison between the models even to a greater extent difficult. The midsize luxury sedan segment offers consumers a unassailable mix of quality components and trade, luxurious amenities, and ample power for daily commuting. These vehicles are designed for consumers who want luxurious, high quality vehicles at a fair cost. The vehicle chosen for this study is the completely-new Lexus GS430 sedan.The Lexus two closest competitors are the BMW 545i and the Cadillac STS V8. The vehicles chosen are with each(prenominal) standard equipment notwithstanding the navigation system option was added to for each one since the Lexus sum ups with it already loaded. The engine and transmission options were also chosen to as match the vehicles in power and value. Since there is no central retail location where one privy bargain for any brand of vehicle they want, trio dealerships were surveyed for worth information for each brand of vehicle included in this study.Surveying triad dealerships for set for the kindred car allows us to not ba avow see the price differences from one dealership to another(prenominal) however also allows us to compare the price of that vehicle with another from a totally different make. See Appendix I for the results of the survey. The vehicles chosen in this study all boasted high quality craftsmanship coupled with fine materials. The materials used in the national of the were applied tastefully, and generously.The body panel fit and eat of all three vehicles was ingenuous, scarce the BMW had the moneyedest tolerances of the group. The paint eat up however left much to be coveted from all three models. There was a group of orange peel in the glossiness of the paint. The home(a) design of the three models was tasteful, with the Cadillac existence the most buttoned-down and the BMW the most radically designed home(a). The Cadillac had a considerably mix of both radical design and hidebound styling.The BMW had the iDrive system which has a short take heeding weave to it, but it is supposed to simplify how you use the systems in the car. There wasnt enough time to learn how to fully utilize the features of the iDrive system, but, in my opinion, turning on the air conditioner shouldnt require reading a manual or much less, a ttending a training posing for how to use the device. The training session is provided by BMW to new owners of vehicles equipped with the system.The iDrive system allow have an effect on a consumers decision to purchase the vehicle since some consumers whitethorn find it cumbersome to use. Cadillacs functions and controls were very simple and straight-forward. The navigation system and radio controls were touch shield and were displayed on a rather large monitor. The controls were patrician to use and logically placed. The Lexus had a good mix of conservative and radical styling. The controls were laid out logically and the interior looked very clean.The Lexus had a hideaway drawer that had a lot of controls and buttons in it that was easily insert away out of view. All three models come standard with passenger and side air bags. They all come with a CD player and heated up seats. A navigation system is available with each vehicle, but is standard on the GS430. To even out th e playing field, the navigation option was added to the Cadillac and BMW. This change in options actually brought the prices of the vehicles very close to personateher. The Lexus had the most take care leg room however the Cadillac had the most interior volume.All three models have about the same power output with the BMW being the most sinewy with a 325HP engine. The Cadillac was a close second with a 320HP engine and the GS430 came last with a 300HP engine. They all happen upon approximately the same miles per gal in the city, but highway mileage varies between the three models with the BMW being the most efficient out of the group. The BMW gets 18 miles to the gallon in the city and 26 on the highway, the Lexus 18/23, and the Cadillac 16/22 miles to the gallon, respectively.The Lexus felt the most sprightly because as was suspected, it had a lower curb fish than the other models. The transmissions on all models were super flat and power delivery was consistent with throttl e input. The Lexus had the smoothest fluff out of all three, however it achieved this because of how disconnected it felt from the highroad. The lack of communication from the suspension to the driver in the Lexus leaves the driver uncertain of road conditions and forces the driver to rely on vehicle safety systems to keep the car stable. The BMW had asport suspension which made the scold a little rougher than the others, but was the most reactive to inputs from the driver and was the take up at communicating road conditions to the driver, and because of this offered the most interactive driving experience. The suspension was tight and allowed the sedan to maneuver like a sports car. The Cadillac also had a smooth ride, but road palpate was more(prenominal) prominent which made the ride heart a little less smooth than the Lexus. The Cadillac maneuvered well, but a stiffer suspension would make this vehicle a real performer.In conclusion, the quality takes of all three vehic les were near the same level. The BMW had the tightest tolerances in fit and finish with the most responsive ride, though the iDrive system is true to turn off some prospective buyers. The Lexus had a smooth ride with luxurious appointments throughout, whereas the Cadillac had a good mix of both performance and luxury. The Lexus and Cadillac also had a keyless entry and ignition system which allowed you to get into your car and turn it on without ever victorious the key fob out of your pocket.The consumers who purchase these vehicles are mid-upper consort citizens. They are price-conscious and would like to get the best bang for their buck when purchasing a luxury car. The difference in the prices of alternate vehicles may be the deciding factor when purchasing a vehicle in this class. I would suggest a lithesome price decrease for the Lexus so it would be priced below the Cadillac, making it the best bang for the buck all the while providing the same comforts and amenities as the BMW and the Cadillac.My estimation of the enquire elasticity of luxury automobiles is that the demand is rather elastic. A slight change in price depart cause a square change in demand for that particular product. If the price of the Lexus, or for any model in this class for that matter, was to suddenly increase a few thousand dollars, that price increase would make consumers consider the Cadillac or BMW instead since they both have the same level of quality and features.Consumption of goods and services that are considered a luxury terminate be easily trim down if the price rises. Hence demand tends to be more elastic for fur coats, luxury cars, extensive vacations, and so forth Goods considered a necessity are so important that buyers tend to respond little to a price change. They do respond however, although demand tends to be price inelastic for such goods (Walbert). Lower priced practical vehicles can be considered necessities since a price increase provide not cause consumers to not purchase these products.A price change will not touch off them to wait until later when the price drops to purchase the car. They will purchase the vehicle at the price prone since it is absolutely necessary to have the car. However this does not hold true for the luxury automobile market. opulence automobiles are a much larger purchase than a practical commuter vehicle purchase. A consumer in the market for a luxury automobile can wait until there is a price decrease before purchasing the vehicle, hence making the demand elastic.