BUSINESSWEEK ONLINE : APRIL 24, 2000 ISSUE
BUSINESSWEEK LIFESTYLE Luxury Cars Get Even More So And price tags go up accordingly. Here are autos that will draw all the envious glances you could want In the booming New Economy, even $90,000 Porsches may no longer measure up as status symbols. ''You drive to South Beach [Fla.] and Southern California, and you see Porsches all over the place,'' says Mark Yamout, owner of a construction-adhesives business in Clifton, N.J. So Yamout, 42, is planning to lay out some $130,000 for BMW's sleek new Z8 roadster, although he can't buy it right away. BMW plans to make only 400 of the coupes this year, and demand is so strong that Yamout won't be able to take delivery until 2002. To satisfy a growing number of affluent customers who want more and more performance, luxury, and cutting-edge technology, auto makers such as BMW, DaimlerChrysler's (DCX) Mercedes-Benz, and even Volkswagen (VLKAY) are offering a panoply of premium vehicles. Some, priced from $80,000 to as much as $250,000, are new models. Others are bigger or sportier versions of existing top-end cars (page 182). Carmakers are also equipping their upscale rides with lots of high-tech luxuries, such as voice-activated controls and Web access. And some will even customize paint and upholstery to match, say, the color of a buyer's favorite sweater. All this ''makes the '80s look like Pikerville,'' says Art Spinella, vice-president of CNW Marketing/Research in Bandon, Ore. You'd think the rising demand for luxury cars would be pushing prices up, right? Think again. With Mercedes-Benz of North America holding the line on pricing over the last three years to boost its market share, prices for existing models have remained flat. Over the past five years, the average premium car's sticker price has risen just 6%, to $56,900. That compares with the 7% increase posted by mid-price cars, says Spinella. To get more money from luxury buyers, ''you either have to build a whole new product or sufficiently improve an existing car,'' he says. So BMW, for one, dreamed up the Z8, a performance roadster reminiscent of its curvaceous 507 sports car of the 1950s, which some fans call the original ultimate driving machine. With deliveries beginning in May, BMW is taking orders for the 394-horsepower, all-aluminum two-seater, with a sticker price of $128,000. Some dealers say the Z8 is commanding premiums of $100,000 above sticker because of the limited supply, although BMW has asked dealers to stop the practice. FALLING BEHIND. If British luxury is more your taste, Ford's (F) Jaguar last year began selling the XKR, a performance version of the XK8 sports coupe and convertible. Despite its $76,800 price tag--$10,600 above the XK8--Jaguar can't make enough XKRs, says Mike O'Driscoll, president of Jaguar Cars North America. If you want the convertible, you'll shell out an additional $5,000. Others are also taking the new-product road. Volkswagen showed in Frankfurt last fall its D1 concept, a 10-cylinder, 300-horsepower sedan. The model, to be priced close to $70,000, should hit dealerships in three years. Even General Motors' (GM) Cadillac division, which these days has all the panache of a pinky ring, is going upscale with plans to build its $80,000 Evoq roadster off the Chevrolet Corvette chassis. ''You have to have something at the top of the fleet with cars that are exclusive and hard to get,'' says James Taylor, a senior GM engineer. Meanwhile, Mercedes plans in two or three years to launch the Maybach, a super saloon on par with a Bentley that could sell for as much as $250,000. Among higher-volume upscale cars, auto makers are one-upping each other with features. This fall, you can buy the Lexus LS 430 with an optional ''ultra-luxury'' package for more than $60,000. It features ventilated front seats, electric sun shades, reclining rear seats with vibrating lumbar massagers, and audio and air conditioning controls for rear seats. Some of Lexus' German rivals, meanwhile, are going the bigger-is-better route. Audi has pushed its biggest sedan upmarket with a longer, $72,000 version of the A8 sedan. Mercedes, meanwhile, has made its flagship S-Class sedan more exclusive by dropping the cheaper S320 from its lineup, leaving only the S430 and S500, starting at $69,700 and $77,850, respectively. Moving further upmarket, Mercedes will begin selling a 12-cylinder S600 later this year for just a tad more than $100,000. Carmakers also are creating high-end performance versions of mainstream luxury models. Mercedes added the $64,900 ML55, a V8 version of its M-Class sport utility vehicle. It also offers the E55, a sportier, $69,800 version of the $52,450 E-Class sedan that kicks out 349 horsepower. Lexus, meanwhile, is cashing in with its so-called ''L-Tuned'' sports packages that include tighter performance handling. The package comes with the GS 300 and GS 400 sedans--and will be available soon for RX 300 SUVs and LS 400 sedans. Even Acura is nosing into the luxury class. Its $88,000 NSX super sports car was recently joined by a 250-horsepower Type S version of its CL coupe. Acura will move up a notch with its next-generation RL full-size luxury sedan, scheduled for 2002. ''These cars are more performance-oriented, and more upscale as far as luxury features and technology,'' says Thomas Elliott, executive vice-president of American Honda Motor (HMC). As long as the good times roll on, car buyers will be more than happy to go for such features--even if it means waiting a while to get them. By DAVID WELCH With Larry Armstrong _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Luxury Cars Get Even More So PHOTO: BMW Z8 TABLE: Riding High--and Paying for It Loads of Muscle, Plenty of Class TABLE: Saab 9-5 Aero PHOTO: Saab 9-5 Aero INTERACT E-Mail to Business Week Online

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