Wouldn’t Supply and Demand Lower the Cost?
Car manufacturers like Kia and Hyundai make pretty nice, luxurious-feeling cars full of features at a reasonable price. These end up being marketed as a good value, which in turn targets buyers who aren’t looking to pay a lot of money for a luxury vehicle. While the car you buy from a company like this will still be a good one, they aren’t anywhere near as luxurious as those you might get from a luxury brand that sells its vehicles for two or three times the amount.
The reason this is the case is primarily because of two factors. The research and development that goes into creating each brand’s line of cars and the materials used to build them. The autos made by more expensive luxury car brands like Range Rover, Lexus and Audi simply require a higher price tag to continue producing the kind of luxe that their customers have grown accustomed to. When it comes to crafting those new vehicles, the research and development alone can be incredibly costly. For example, the R&D that goes into Mercedes-Benz parts is much more costly than what you would expect to find from a brand like Hyundai, but that also means they last longer and generally have a better resale value.
Furthermore, the cost of the actual materials that go into making high-luxury vehicles doesn’t scale like many other types of manufacturing. Where tons of companies can lower prices the more they produce a certain item, high-end products – be it cars, electronics, shoes, furniture or anything else that gets put on the market. For example, fabrics can be made from synthetics or grown relatively quickly to create the covers for seating in a car, the more-luxurious option of leather is going to cost more due to being more difficult to cultivate and process.
One of the best ways to understand why luxury car makers can’t mass produce and sell their vehicles cheaper is to look at it in the scope of ordering pizza (odd analogy, I know, but hear me out). If the pizza place makes two sizes of pizza, it is like asking them why they can’t sell their large pizza at the same price as the small just by making more large pizzas. More ingredients go into making the bigger pie and, therefore, is just going to naturally cost more. Likewise, nicer cars use better materials that simply require more money.
