Thus may be good for some people, but some people like buying cars for their names and only that reason. Like my aunt said after going to look at new Mercedes. "They're too overpriced, you're buying the name."
 
Shortly after, she had a new Benz.
 
Same with the original IS300, which was a crappy car considering it was a Lexus and it's price, but it wore the Lexus badge, therefore, a cousin always went around talking about his brand new Lexus.
 
When people are buying BMWs and Mercedes they do not necessarily care about if it has the same features as an Acura or Infiniti, but only the "street cred" it has.

This holds true even on less expensive models. Think Hyundai Azera vs Toyota Avalon. The flying H is still working on its "street cred", so cheaper and better equiped gets trumped by precieved quality. That said, the problem doesnt seem as bad here in the midwest as it is in Cali, but it still exists.

I could not agree with you more! My husband and I just bought new cars (since both of ours were well over 100,000 mile each). He got the Infiniti G35 AWD, and I bought the Hyundai Veracruz GLS with AWD. Both have the word "value" written all over them which is all I care about in a vehicle. Cars aren't investments. To me, it makes absolutely no sense at all to pay in incremental $11,000-$14,000 for the same feature set just because of a brand name.

I fully agree that Infinity, Lexus and Acura are as good as Mercedes and BMW, and, based on their abilities, they should cost about the same.
 
But if I had the money to spend on these cars, I would be willing to spend more on the Mercedes or BMW for the following reasons:
 
1. One thing really I don't like about Infinity and Lexus, especially Infinity, is that they often look too much like the Nissan and Toyota models they are based on. The Infinity G35 looks almost identical to the 2007 Nissan Altima. Obviously, I wouldn't like to buy a luxury car that looks the same as an everyday car, even if the luxury car is indeed way better. Similarly, it is easy to confuse the 2007 Lexus ES and the 2007 Camry. Meanwhile, nobody would ever confuse a BMW with a cheaper brand.
 
2. Would you believe that the Acura TSX is actually called the Honda Accord outside of the US? Why would I want to pay luxury-car price for a glorified Honda Accord?
 
3. There are many people who resent the fact that Infintiy, Lexus and Acura are made by manufacturers who are better known for making great everyday cars. One friend once told me: "I'd never buy a Lexus.......it's a rebadged Toyota!" See what I mean? This means that a Benz or BMW owner will get more respect/prestige than a Lexus driver.
 
4. Mercedes and BMW have long been status symbols. Acura, Infinity and Lexus are relatively new to the game and it is not surprising that people to not take them as seriously.
 
Let's not forget that luxury cars are ultimately about prestige and not necessarily about the cars' abililties or value. Someone shopping for an S-Class or any luxury car does not care about value, and so is likely to choose the S-Class over a cheaper-but-equally-good car if he/she thinks the S-Class offers more prestige.

"The Infinity G35 looks almost identical to the 2007 Nissan Altima"
  
Really? Have you actually looked at these two cars side by side? It's spelled Infiniti, too.
  
"Would you believe that the Acura TSX is actually called the Honda Accord outside of the US? Why would I want to pay luxury-car price for a glorified Honda Accord?"
- Considering a closely equipped Accord is only about $2,000 less than a TSX, I'd wouldn't say you're paying luxury car prices. The price difference between the two is justified, if you've ever sat in, driven or even looked at both. Furthermore, the European Accord is a far different animal than our Accord. What about the Audi A3? It's basically a VW Golf, does the same logic apply?
  
To say that a Lexus is just a rebadged Toyota is just ignorance, and who really cares what they think?
"This means that a Benz or BMW owner will get more respect/prestige than a Lexus driver." Is our society that pathetic that we base respect of a person on the fact they own a $65,000 Benz instead of a $55,000 Lexus? Yes it is that pathetic, but my question is, shouldn't we re-address this absurd notion?
 
Yeah, the Joneses next door may be impressed with your new Benz and show you more "respect" because of your greater prestige. If that's worth the $10,000 premium and the well-documented unreliability, then congratulations.

nice write-up james. it's a sad truth about "brand prestige" and the conceptions that accompany it. consider it marketing dollars that paid off - obviously no benefit to us. well, maybe some. i have to admit though, for the price, i'd take the Infiniti M over the others in the "class" (seeing as i drove all of them and the M was, imo, the most fun to drive and not too harsh as one would expect from a performance sedan). you're right though- consider every car in the price point aside from the "brand name". people might find themselves pleasantly surprised.

All that has been said in these postings and James' main article are true. But we're missing the point here. Average people buy cars with value and reliability as the main priorities, with styling and driving fun sometimes a close second.
Luxury car buyers, on the other hand, buy luxury cars with prestige and "respect" as the main priorities, with the qualities that average buyers seek not being as important. Hence, they're more likely to buy a Mercedes and get more "respect" from the Joneses than buy a far more reliable Infinity that could be confused with a 2007 Altima at a distance!
James' article and the posts here are looking at luxury cars from an average buyer perspective, thus missing the point completely.
 
In my humble opinion, luxury cars are completely unnecessary (apart from the prestige they offer). These days, most cars come with ABS, side-airbags, cruise control, traction control, premium audio, automatic climate control and leather seats as either standard or easily obtainable options.....for very affordable prices. (It's not like the '70s and '80s when even power steering was a luxury.) One can do without just about all the other features that come with luxury cars. For example, who really needs a car that can parallel-park itself? It's a nice and convenient feature to have, but unnecesary. We were all taught parallel parking when we got our licences...... So, from a purely economics point of view, luxury cars are (almost) a waste of money, to be honest.
 
Hence, the only motivation to buy a luxury car is the prestige, or to "spoil" oneself with could-do-without luxuries. For someone who is willing to spend $70,000+ on a car, value is just not a priority, but prestige is. Such a buyer also likely has more than one car so reliability is not a top priority either. To these buyers, the extra $10,000 an equivalent Mercedes or BMW commands is well worth it for the reasons I stated in my previous posting. Let's just realise what luxury cars are for.

There's a big difference between a $70,000 luxury car and a $35,000 one. Obviously the guy throwing down close to 100 G's on an S-Class couldn't care less, since most of those purchases boil down to taste more than real head-to-head competition. But the real disparity comes at lower price points, where there is far less of the technological and luxury frivolity.

Coming to think of it, there is another factor that feeds the myth that a German luxury car is better and hence more prestigious than an equivalent Japanese one. It's psychology.
 
The current top-of-the range German luxury cars are much faster. The Mercedes AMG series, the BMW M and the Audi RS are all ultra-fast and there are currently no Japanese offerings that are that fast.
 
Now, when a buyer is choosing between a BMW 530i and an Infinity M35, they are likely to (at least initially) favour the 530i because they think the about abilities of the M3 or M5....instead of concentrating on the abilities of the 530i that they want to buy. The thinking is that since BMW can make cars like the M5 and Infiniti can't, the 530i must be better than the M35. Informed buyers would not make these mistakes, but not-so-informed buyers would.
 
So although few buyers actually opt for the M3, M5, CL600AMG and the RS4, these cars actually are vital because they increase sales of lesser German luxury cars by increasing positive perception (and hence prestige). Acura, Lexus and Infinity would see an increase in sales (and eventually, price) if they were to produce such models.
 
Similarly, I believe that the recent LS would increase sales of the IS and ES and increase the prestige of the Lexus brand because it offers technologies like parallel-park-myself and hybrid technology that the Germans and other luxury manufacturers cannot offer yet......although the IS and ES don not currently have these features. I bet people now percieve Lexus to be almost as good as Benz and BMW and better than other Japanese luxury brands. No wonder Lexus commands a higher price premium than Acura and Infiniti!

I see Lexus, I think Toyota. I see Porsche/Audi, I think VW. Acura means Honda. Land Rover and Volvos? Well, they're Fords in my mind.
  
I used to be impressed by Caddy's until I noticed "Body by Fisher" stamped in our Buick and in friends' Chevys and Oldmobiles.
  
I see Alpo or Science Diet and I think Menu Foods.
  
I think I'll buy a Sorento and put some MB badges on it and impress my neighbors. :-)