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A Duesenberg, "one of the greatest luxury cars" with custom body by Willough by Automobile manufacturers market specific makes and models that are targeted at particular socio-economic classes, and thus "social status came to be associated more with a particular vehicle than ownership of a car per se." Therefore, automakers differentiate among their product lines in "collusion" with the car-buying public. While a high price is the most frequent factor, it is "styling, engineering, and even public opinion which cars had the highest and lowest status associated with them."
Every era in automobile history has had "a group of car marques and models that have been expensive to purchase, due to their alleged superiority of their design and engineering". Aimed at wealthy buyers, such automobiles might be generically be termed luxury cars."This term is also used for unique vehicles produced during "an era when luxury was individualistic consideration, and coachwork could be tailored to an owner like a bespoke suit."Although there is considerable literature about specific marques, there is a lack of systematic and scholarly work that "analyzes the luxury car phenomenon itself.
Luxury vehicle makers may either be stand-alone companies in their own right, such as BMW and Mercedes, or a division/subsidiary of a mass market automaker (e.g., Lexus belongs to Toyota). Badge engineering may often be used for economical cost savings, such as most Lincoln vehicles being based on Ford.Though widely used, the term luxury is broad and highly variable. It is a perceptual, conditional and subjective attribute and may be understood differently by different people: "What is a luxury car to some... may be 'ordinary' to others."
Italian Isotta Fraschini Tipo 8A S LeBaron Boattail Roadster was a 1930s luxury car.
According to the European Commission, the "luxury vehicle" segment is classified as F-segment. However, the boundaries between the traditional segments are increasingly becoming blurred and diluted as features once exclusive to luxury vehicles become standard equipment on even small cars.
ACRISS is a code system used by many car rental companies in the US for classifying vehicles (but not brands or marques). The system includes Luxury and Premium categories.
Australia: In Australia, for taxation purposes a luxury car is defined as a passenger car whose value exceeds a certain threshold[ (see: Luxury Car Tax).
France: In France the term "voiture de luxe" is used.
Germany: In Germany the term "Upper class" (German: Oberklasse) is used.
Russia: Russian markets use the term "representative class vehicle" (автомобиль представительского класса, also translated as "luxury vehicle").
United States Consumer Guide's categorization which sorts luxury vehicles by size acknowledges that there can be considerable price variations within a class; for instance the Lincoln Town Car has a relatively low MSRP (Manufacturer's Suggested Retail Price) compared to the Jaguar XJ, BMW 7 Series, Lexus LS, or Mercedes-Benz S-Class.
The compact executive car segment or small-luxury class is relatively new, having been initiated by several European brands in the mid-2000s, and constitute the least expensive offerings in their lineups. These cars are targeted at a niche market of young customers who have the means to pay for them. By offering a smaller, lighter, more fuel-efficient, and less expensive vehicle, this serves to introduce a younger customer to the luxury marque, in hopes of retaining the coveted customer loyalty. This includes the Audi A3, BMW 1 Series, Lexus CT, Mercedes-Benz B-Class, Aston Martin Cygnet and Volvo C30.
Premium compacts may share components with mass market cars from the marque's parent company (the A3), and/or have less sophisticated platforms compared to upmarket vehicles in the lineup (such as the B-Class). The body style tends to be a hatchback or compact wagon, previously associated with economy cars but regaining popularity in the United States for its afforded utility. The luxury branding and style, high-quality interior materials, wide range of convenience features, and performance powertrains are key to distinguishing them from mass market equivalents (one mistake made by the Cadillac Cimarron) and making these appeal to consumers.
The classification varies, for instance Consumer Guide Automotive in the U.S. considers the Audi A3 and A4 as part of the premium compact segment due to similar size and MSRP, though these are known in Europe as a small family car and a compact executive car, respectively.