Luxury Cars vs. Premium Cars: Is Value or Status Worth More?

Written By, NowCar Team

Over the past decade or so, the differences between luxury cars and premium cars have certainly been blurred. Luxury models are typically regarded as the higher-end vehicles while the premium models are often accompanied by a more reasonable and affordable price tag. 

Otherwise, the two types of cars seem very similar. Of course, just to confuse everyone, Cars.com has even added their own segment between the two categories: "near-luxury cars." This addition is accounting for those vehicles that fall between the blurred lines of luxury and premium vehicles. Talk about confusing!

Michael over at BrandUniq.com actually found an announcement for a 2014 Hyundai Equus that uses BOTH words to describe the sedan:

“At next week’s New York Auto Show, Hyundai will spotlight the 2014 Equus, the mid-cycle update of its premium-luxury sedan. The sedan will compete with high-end makes, such as the Mercedes-Benz S-Class and BMW 7-Series.”

If you've considered buying a new car online, determining the slight differences between luxury and premium can be daunting. We highlighted the benefits of both types of cars below, which will hopefully make your decision easier...

Similarities

When you opt for either one of these vehicles, you'll be receiving the "most advanced safety options and best entertainment technology on the market," as Hannah Elliott of Forbes.com explains. The features you're typically spending extra for (heated seats, leather trim, DVD player) are all standard in these cars. In fact, there's not much that isn't automatically included in the vehicle, and the few features you can add are certainly available for a niche market.

When it comes to various safety features, drivers will often get to experience technology that won't be mainstream for a couple years. As Elliott writes, electronic stability control, blind-spot warning systems, and anti-lock brakes were all integrated into the general car market following their original appearance in luxury/premium cars. Perhaps we'll someday see some of the current exclusive safety features included in all vehicles!

The interiors are as luxurious as they get, often including top-of-the-line upholstery or leather. The same goes with the exterior, where the vehicle's body and style are often deliberately designed to impress. While a luxury/premium vehicle may share a chassis with a more mainstream car, there's a good chance that the differences in styling will distinguish the two vehicles. The same goes for the engine and handling, as engineers have devoted plenty of time and effort into getting an impressive, strong vehicle on the road. They're not neglecting these more mainstream cars, but they're all looking for ways to separate their luxury or premium vehicles.

Surprisingly, these vehicles are typically pretty easy and affordable to repair. This is especially true if you're purchasing from a large American brand, as you can easily take your new vehicle down to a service center. Considering the necessary parts are easy to come across, you won't be looking at pricey fixes.

The luxurious interior, stylish exterior, and innovative engine means you can expect a solid payday when you eventually look to resell the vehicle. Sure, you'll have to take into account the standard depreciation rate. However, you should recognize that you'll still be receiving a solid chunk of change when it's time to move on to another car.

Finally, you can expect some kind of assurance that you won't have to pay an arm and a leg to fix up your car in case of an accident. Jim McDonnell, the president of BMW North America, said that his company will give car buyers free maintenance and roadside assistance for their first four years on the road. This is strategy is utilized by multiple luxury/premium brands, which should provide you with some sense of comfort.

The Argument for Premium Cars

2016 Hyundai Genesis 

The price of luxury vehicles are often too high for the typical consumer, and they'd certainly have to stretch their budget when pursuing that type of car. Premium brands are still certainly pricey, but they're significantly more affordable. You can still receive much of the accompanying glitz and glam (that is what you're paying for, after all), and you can still expect quick the impressive vehicle.

Continuing with the price, a premium car's value seems more justified than the value of a luxury car. For premium vehicles, the customer is paying extra to receive all the amenities, an expected fee when you're opting for all of the different features. When it comes to luxury vehicles, many are convinced the cars are just "gussied-up versions of mainstream models." When customers opt for luxury cars, they're essentially paying extra for the rarity of the nameplate.

The real market for premium cars is young consumers who can't afford the pricier luxury vehicles. Having replaced the now-retired compact executive cars, these premium vehicles could reasonably compete with fully-equipped midsize vehicles.

As we mentioned above, premium cars share many of the same attributes as a luxury car. However, premium cars are significantly easier to come across, meaning they're generally less expensive. When it comes down to it, the price tag is what gives premium vehicles an advantage over luxury vehicles.

The Argument for Luxury Cars

2016 Mercedes E-Class

The main advantage of buying a luxury car is confirming your "status." If you're not particularly interested in what others think, luxury cars will probably be of little need to you. However, if you're looking to impress, there's no better way to do that than with a luxury vehicle.

“Some people want the latest and greatest of whatever,” Jeff Bennett, an automotive marketing professor, told Elliott. “It’s about having the money to buy it. It’s about being able to say, ‘Hey, this is how successful I am.’ ”

Yes, you're going to have to dish out a whole lot of money for a luxury vehicle. However, when you consider how exclusive each of these vehicles is, it explains the exuberant price. Sure, you might feel silly dishing out more than six figures for a car, but you shouldn't expect to pay any less when you're dealing with a nameplate that's in limited supply.

Safety features and engine power are both prioritized in luxury cars. Elliott notes that more than 70-percent of vehicles that feature "stability control, traction control, ABS, side-front airbags and curtain airbags" come in north of $30,000. Meanwhile, of 353 vehicles with horsepowers above 300, there were only six that cost less than $30,000. If you’re looking for advanced safety features or impressive specs, it’s clear that you’ll want to opt for a luxury vehicle.

“I think [luxury automakers] have to differentiate with something that is really, truly functional or safety-oriented,” Jake Fisher, the senior automotive engineer from Consumer Reports, told Elliott, “rather than the argument that ‘I’m buying this kind of car because I really want it.’ “

As a car buyer, you'll have to determine what you prioritize from a luxury/premium vehicle. If you want a relatively affordable car that is decked out with features, you should consider a premium. If you want to show off your vehicle and confirm your wealth and luxury, you should opt for a luxury. Regardless, we're certain you will be happy with whatever vehicle you choose.

After all, this may be the fanciest car you'll ever own!

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