Is BMW still a luxury brand?

Is BMW still a luxury brand?

A thought occurred to me this morning when Audi revealed its range-topping R8 GT Spyder, that with most of BMW’s main competitors now retailing cars well above the £100,000 threshold, can we still consider BMW a luxury brand?

With BMW’s most expensive car, the 760Li, priced at just £100,280 and the now discontinued 2010 M6 having retailed at £89k – £92k, it’s a far cry from Mercedes’ priciest model (SLS AMG Roadster – £189k) or indeed Porsche (911 GT2 RS – £172k).

Now don’t get me wrong, I’m not saying that £100k for a 7-series is cheap, but for almost a decade the residual values of top BMWs have suffered largely because the brand is not yet perceived as being on a par (price wise) with its closest neighbours in Stuttgart, and now Ingolstadt.

I received a very personal example of this issue when I bought an M3 CSL in 2003, although priced considerably less than its nearest Porsche rival (911 GT3), values quickly went into freefall reaching virtually half of its £59k list price in just over 12 months. It was the lesson learned from this experience that eventually dissuaded me from taking the M3 GTS that I’d ordered – £120k doesn’t yet cut it for a BMW, no matter how rare their number.

In marketing we usually describe it as giving a brand headroom and top-of-the-range models play a very important part in lifting the expectations of consumers, so that mid-range and premium models (£35k – £70k) are perceived to be good value for the brand.

It’s a dilemma I know the executives at BMW are all too aware of and the good news is that BMW will have the i8 supercar (Vision EfficientDynamics) going on sale in late 2013, with an expected price tag of around £150,000, plus of course the 2012 M6 which will likely breach the £100k ceiling in convertible guise.

Some might question whether Audi’s brand can really carry the £180,000+ price tag of the R8 GT Spyder revealed this morning, but then they don’t seem to have too many problems shifting V10 models and neither do Mercedes with its SLS AMG.

Whilst this might all seem irrelevant to the vast majority of car buyers spending less than £30k, it’s all about creating headroom for a growth in customer perceived value (CPV) which then makes your 1-Series, 3-Series or Z4 seem like just a bit more of a bargain.

Here’s a little infographic I threw together to illustrate the point..