High and mighty in lean times

Shiny sports cars with six-figure price tags flood the market at a time when more people are pinching pennies.

By , Special correspondent of The Christian Science Monitor

Automobile lovers, rejoice! It's new-car season again, and this year's crop promises more for everyone - more luxury, more performance, more economy, or more comfort.

The most striking trend?

Call it "conspicuous acceleration."

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Never in recent times have so many flashy new models debuted from historic, sports-car makers such as Aston Martin, Maserati, Lamborghini, Porsche, Mercedes-Benz - even Ford. Most of these expensive vehicles add sporty zip to luxury appointments with skyrocketing prices to boot.

There's just one problem. With the economy still in the doldrums, flash and dash seem out of place. Even those who can afford to plunk down more than $100,000 for a Ford GT - or more than $300,000 for a Porsche Carrera GT - may decide to throttle down the opulence in these staid times.

"People don't want to be seen as putting on airs; they think it's unseemly," says Robert Frank, an economist at Cornell University and author of the 1999 book, "Luxury Fever."

Fortunately, the presence of these cars raises the bar for everyone else.

At the lower end of the market, intense competition has kept automakers from raising prices much. So cars priced around $30,000 are faster, more comfortable, and more capable than ever before. And many that cost less than $20,000 are at least a lot more comfortable. (See story, left.)

The startling disconnect between the automobile showroom and the tight economy arose because of automakers' design cycles, says Daniel Pund, senior editor of Car and Driver magazine in Ann Arbor, Mich. "There's an unbelievable selection of high-end stuff. When these cars were conceived, the economy was in a much better position," he adds.

Whether the ultrarich will spend six figures for a car is an open question. But there's no question they have it to spend. In the United States, easily 1 million families have enough money to afford these cars, says Dr. Frank.

For those at the tail end of the wealthiest 1 percent of American families, a new $350,000 Porsche Carrera GT amounts to less than a year's income, Frank says.

For buyers and sellers, these cars are all about image. Those who buy them want to let others know they have the best.

"These cars are about ego," says Jim Hall, a Detroit-based auto analyst with AutoPacific, a marketing-research firm based in Tustin, Calif. "The companies doing them have made up their minds, regardless of the business case."

Ironically, one reason for the rise of these cars is the downscaling by some traditional luxury nameplates. For example: As Mercedes-Benz offers more models in the $25,000 to $35,000 price range, it reaches a wider audience. That drives some luxury buyers to seek something more exclusive, such as a $150,000 Bentley Continental GT coupe or a $357,000 Maybach limousine with reclining back seats and tray tables that look eerily similar to the first-class section of an airliner.

But for every $200,000-plus Mercedes-Benz SLR McLaren, which does zero to 60 in under four seconds, there are many more affordable do-everything cars for the masses.

For those who don't want to put on quite so many airs, Volkswagen will soon offer the $60,000 Phaeton sedan, with all the trimmings and space of a Mercedes S-class sedan, for $20,000 to $30,000 less. Even Hyundai now sells a luxury car, the XG350, for under $25,000.

But the main effect of the ultrafast play toys of the rich and famous is a revival of sports cars for the masses. Most automakers don't expect to make a ton of money with high-end sports vehicles. But they hope their joie de vivre will rub off on more plebeian stablemates on the showroom floor.

Take Ford's GT, due out next spring. The low-slung sports car is a replica of racers that won the famous 24 Hours of Le Mans three decades ago. Ford expects to produce fewer than 1,000 over the next several years, selling them for between $100,000 and $150,000.

A little rich for your wallet? The company hopes the GT will get you to pony up $30,000 or so for a new Mustang GT with some racing heritage of its own.

The Japanese have also joined in the rubber-burning assault. After shredding the roads of Europe and Japan for seven years, Subaru's WRX STi and the Mitsubishi Evolution VIII - Evo for short - are finally making it to the US. Neither looks like a traditional sports car, with four doors, and upright cabin, and lots of glass. But both have giant wings on the trunk.

With 271 horsepower, the Evo blasts to 60 miles per hour from a standstill in a scorching 4.8 seconds - faster than a new Porsche. The WRX STi has even more power.

Both of these Japanese entries sport all-wheel drive and back seats. With prices in the low $30,000 range, they'll blow the doors off traditional sports cars that cost twice as much. But they're hardly economy cars.

Mazda also hopes to please sports- car nuts who still have to fit a family with the $27,000 RX-8. This four-door is a reprise of the rotary-engine sports car that first appeared in 1978.

For budget buyers who want exclusivity, Chrysler sells the $38,000 Mercedes-based Crossfire coupe. The sleek, aggressive two-seater is a luxurious alternative to favorites such as the Audi TT.

Even these low-end sports cars are all about image, says Sam Fiorani, an analyst with AutomotiveCompass.com.

Manufacturers are hoping to build so-called "halo" cars, he says, hoping their sporty image will rub off on the rest of their lineups.

"While there are always perennials like the [Porsche] 911, the Corvette, and the Miata, if you're not one of those, you're going to be a flash in the pan. Every [manufacturer] jumps in, then nobody buys them," Mr. Fiorani says.

With so many new sports cars congesting the fast lane, bargains may leap out for consumers. Automobile manufacturers are building all these ultra-high-end cars, because "there's so much competition squeezing their profits in the lower end," says Mr. Hall.

More luxury in small packages

If you're among those of us who think a $100,000 a car ought to come with three bedrooms, 1-1/2 baths, and a yard, take heart. Rising standards for expensive cars are filtering down to make even modest cars much more comfortable.

Not so sure? Just try to find a new car these days without power windows, remote locks, or air conditioning.

For several reasons, 2004 has produced a bumper crop of nicely appointed affordable transportation.

Many of the new models come from General Motors in its various guises. For starters, since GM bought out the assets of defunct Korean carmaker Daewoo, several of its bargain small cars are showing up in Chevrolet and Suzuki showrooms. "The reintroduction of these cars from Daewoo is dramatically expanding the selection in the entry-level market," says Daniel Pund, senior editor of Car and Driver magazine in Ann Arbor, Mich.

The Chevrolet Aveo finally replaces the largely unloved Metro as Chevrolet's entry-level import. The egglike little sedan has over 100 horsepower, gets about 34 miles per gallon on the highway, and starts at $9,999.

Two new Suzukis also come from GM's alliance with Daewoo. The Suzuki Forenza and Verona are compact and mid-size sedans, respectively. The sharp looking Forenza offers more luxury features than the Honda Civic or Toyota Corolla, and starts at about $12,000. The Verona features standard six-cylinder power, offers leather seats, and starts at under $17,000. Both have sheet metal sculpted in Italy, making them near luxury cars (without a luxury nameplate).

The big news at General Motors is the all-new Malibu mid-size sedan based on the same European underpinnings as the upscale Saab 9-3. Starting next year, the Malibu Maxx will arrive with a large hatchback and eventually will offer hybrid-electric propulsion. In the meantime, engine options are a four-cylinder or powerful V6.

Want something bigger? Kia will take a stab at the big-car market with the Amanti. It's bigger than Toyota's luxury Avalon or Buick's LeSabre, according to Motor Trend magazine, and packed with features starting at $22,500.

If Japanese cars are more your speed, consider Toyota's new youth brand, Scion. The xA and xB are tiny, but tall, so they're not too cramped. They offer levels of refinement approaching Lexus quality and start at $13,000 for the tiny xA and $14,000 for the boxier xB.

Industry analysts expect small cars will continue to carry more luxury options in the years ahead.

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