Luxury cars, a hoax?

Correspondent (Business)

BERLIN — Forbes wonders whether luxury cars are just a scam to get people spending ridiculous amounts of money on products just for the sake of the brand. One of Forbes most recent articles discusses how consumers are tricked into spending as much as $30,000 or more on a luxury car rather than buying a cheaper equivalent. In theory the cars are the same, thus the high price of a luxury car being merely dictated by its name.

Forbes uses Toyota and Aston Martin as examples, as they have both been manufactured on the same Toyota production line and differ just by few bits and bobs and, of course, by name.

The same kind of trend can also be seen when it comes to the ‘normal’, non-luxury car manufacturers. For example the British magazine Which? accuses Volkswagen of pricing some of its cars differently even though they are all manufactured in the same country and on the same production line.

However, there are limited editions and collectibles, which will not lose their value, but rather gain more of it over time if kept well. The same phenomenon revolving around brands does not only affect the car industry. Products such as clothes, shoes, bags, foods, services and more are priced high up merely because the consumers can be trusted to recognise and favour the brand in question.

The question remains whether it is actually worth it to spend money on a brand. There are those who feel brands are a hoax and then there are those who feel buying a product with a recognisable name is an investment. Even though many products’ high prices are based on the name of the product rather than for example the quality of it, it could be argued that spending money on a brand really is an investment if the name keeps up its value.

A luxury car loses a big chunk of its worth as the buyer drives it off the shop, but if I buy a Louis Vuitton bag today and pass it on to my children, it can be worth a small fortune in 60 years’ time.

According to Bloomberg.com, stock prices of brands such as Gucci and Coca Cola are rising steadily. At the same time it is interesting to see that even non-brands are doing well as Wal-Mart Stores Inc. is on the top of the list of top gainers by index.

Image Courtesy: Morten Schwend (http://www.flickr.com/photos/schwend/3706217455/) span>