Top 10 Value Buys in the Luxury Category

Are luxury and affordability incompatible? Not at all. By shopping carefully, you can drive home quite a bit of luxury without making a massive expenditure.

About a dozen luxury vehicles start at less than $30,000. Several more come close to that figure.

Trouble is, that price is often for the most basic model, which may not include all of the equipment you'd like. Add a few options, and the price can suddenly escalate well past the $30,000 mark and start encroaching on one of the company's higher-end models. In addition, some options may not even be available on the base model.

Unless you're overwhelmingly attracted to a specific model, it might be wise to consider those that deliver the greatest amount of luxury for the dollars you plan to spend. As it happens, the line between luxury vehicles and well-equipped versions of ordinary models is often a hazy one. By judicious use of the options list for a less-luxurious model, you could wind up with as many comfort and convenience features as you'd get in a true luxury automobile for a considerably smaller outlay.

But what you lack with that choice is the image that comes with owning a vehicle from a luxury brand. Plenty of people are willing to pay extra for this.

What Is a Luxury Vehicle?

Luxury is largely a blend of comfort and convenience equipment in a car from a manufacturer that has a particularly appealing brand image.

Which equipment turns an everyday automobile into a luxury model? In the luxury field, a strong powertrain is a given. Otherwise, there's no set rule.

Priced at $2,000, a navigation system is the Acura TSX's sole option.

The higher up the luxury scale you go, the better chance you have in getting a vehicle that has power seats (possibly heated), a tilt/telescoping steering wheel, automatic dual-zone climate control and leather upholstery. Luxury models are more likely to be equipped with the full complement of airbags and such safety features as an electronic stability system and active cruise control. But even at the loftier end of the luxury league, such features as a navigation system or backseat video entertainment system may be optional rather than standard fare.

Three Factors That Determine Value and Affordability

Sticker price: The manufacturer's suggested retail price, or list price, is the most useful starting point in determining the value of a vehicle. Most shoppers actually wind up paying less than the MSRP, which is spelled out on the model's window sticker.

Luxury cars from higher-end manufacturers are less prone to have heavy discounts. There are exceptions, but on the whole you're likely to pay a price closer to the sticker price than you would for a lower-end model. Luxury models from domestic manufacturers tend to have greater incentives, in the form of rebates or low-interest financing, which can knock down the effective purchase price considerably.

You need to weigh the car's likely selling price against the amount of standard equipment. If some of the accessories or conveniences you desire are offered as options, their cost has to be added to the total.

Comparative equipment: When considering features, you're trying to find out how a particular model stands up against its comparably priced rivals in terms of standard equipment. What features will you typically find in an affordable luxury model? It should have all or most of the common power accessories (windows, doors, mirrors), as well as remote keyless entry and an audio system that includes at least a CD player.

Cloth upholstery might be standard at the lower end, but many affordable models come with leather. Air conditioning might be automatic in operation but that feature could be an option. Once you've narrowed down your choices to several possibilities, it's important to compare their equipment lists side by side.

The relatively affordable (among luxury vehicles) Lexus ES 330 is expected to retain up to 60 percent of its value three years from now.

Depreciation and reputation: How much will the vehicle will be worth a few years from now? That's an important factor in determining its desirability, whether you lease it or buy it outright. A car with a high projected residual value will often be worth more as a used car several years down the road.

What role does brand name play in the luxury vehicle segment? In a word, plenty. Certain brands command a price premium compared with others, and sometimes the upcharge is significant.

If you don't care much about image, you can probably get better value by choosing a less-renowned brand or a nonluxury brand entirely. But for most people, emotions play a big part in automobile purchases. Even if logic dictates otherwise, the make and model assume an importance that's hard to resist. So if you're happier in a vehicle that you can point to with pride for the next few years, paying a premium price is the way to achieve that satisfaction. It's all a matter of personal choice.

Top 10 Most Affordable Luxury Vehicles

Acura TSX: Despite being the lowest-priced member of the Acura family, the TSX sedan offers quite a few of the features found in its more costly siblings. No less important, you get the same brand image as any model from Honda's luxury division. One difference is its four-cylinder engine, but you can have either a six-speed-manual or five-speed-automatic transmission for the same price. The impressive standard-equipment list includes an electronic stability system, perforated leather upholstery, heated power front seats, a moonroof, dual-zone automatic climate control, XM Satellite Radio, xenon high-intensity-discharge headlights, a 360-watt sound system with a six-CD changer, and side-impact and side curtain-type airbags. A navigation system is the sole option. The TSX also has excellent resale value.

Audi offers the A4 in sedan, wagon and convertible body styles, but the latter two are priced considerably more than the base sedan.

Audi A4: The compact Audi A4 1.8T with a turbocharged four-cylinder engine is the model that slips comfortably under $30,000. A five-speed-manual gearbox is standard, but you can choose Audi's continuously variable transmission or quattro all-wheel drive without boosting the price above $30,000. If you want an Avant wagon instead of a sedan, you'll have to pay more. Standard equipment includes dual-zone automatic air conditioning and an electronic stability system, but such extras as a moonroof, leather-trimmed seats and power-adjustable front seats are optional. Audi's resale value is strong.

Buick Rendezvous: The midsize Buick Rendezvous sport utility vehicle makes the cut because of its relatively low sticker price, augmented by the fact that domestic models are more likely to carry incentives that slash the actual price even more. The most-affordable model is a front-wheel-drive Rendezvous CX, which has a minimal standard-equipment list. In addition, Buicks in general and the Rendezvous in particular are plagued by low resale values.

Chrysler Pacifica: In base trim with front-wheel drive, Chrysler's "crossover" wagon has a modest standard-equipment list. There's no tachometer, and seating for five occupants is standard. Some options, including a sunroof and video entertainment system, aren't available on the base model. On the plus side, you can step up to an all-wheel-drive base wagon with the more-powerful 250-horsepower, 3.5-liter V-6 or a Touring edition with front-wheel drive and still stay below $30,000. Resale value should be reasonably good, too.

Hyundai XG350: You might be surprised to see a Hyundai on our affordable-luxury list. The South Korean automaker is well known for budget-priced cars, but the company's top model has quite a bit of luxury to offer for a moderate price. You get automatic air conditioning, a CD/cassette stereo, leather upholstery and power seats in the base sedan. Moving up to the XG350L, which still falls comfortably below the $30,000 limit, adds a driver-seat memory system, a moonroof and an eight-CD changer. On the down side, Hyundais have suffered from low resale value.

Land Rover's Freelander is one of the few remaining SUVs available as a two-door model.

Land Rover Freelander: Land Rover produces three SUVs, and the Freelander is the least expensive by quite a bit. As usual, you get the Land Rover image and a few of the features offered in the bigger LR3 and Range Rover. Still, the Freelander is a sharply different type of vehicle that's not intended for heavy offroad usage, which is how Land Rover earned its reputation. Its standard-equipment list is less impressive, too. A Premium Package that includes leather, a Harman Kardon six-CD system and 18-inch wheels is available. On the other hand, both the two-door SE3 and four-door SE are priced the same.

Mercedes-Benz C-Class: Redesigned for 2005, the C-Class line includes coupes, sedans and wagons. A number of different engines are available. As the least-expensive choice, the C230 Kompressor Sports Coupe, with its supercharged 1.8-liter four-cylinder, ranks as an affordable model. It comes with dual-zone air conditioning and electronic stability control, but otherwise the equipment list is moderate. However, you can choose a C320 Sports Coupe with a V-6 engine or a C230 Sport Sedan and stay within the affordable price category. C-Class Sports Coupes offer a sportier driving experience than C-Class sedans, which have a heavier feel.

Saab 9-3: Only one member of the compact 9-3 family falls into the affordable category. The 9-3 Linear sedan has an electronic stability system, leather upholstery, and side-impact and side curtain-type airbags. The better-equipped Arc model reaches only a little past the $30,000 mark, but a 9-3 convertible is considerably more costly.

Volvo S40: Although its standard-equipment list isn't the most complete, the recently redesigned compact sedan from Volvo is an appealing and affordable choice for its safety features and reputation. Resale values are high, too.

Volvo V50: If you prefer a wagon to a sedan, the recently launched V50 is similar to Volvo's S40.

Though it wears the same name as its sedan sibling, Infiniti's G35 coupe has a significantly different appearance.

If you're willing to edge a little past the $30,000 barrier, the number of relatively affordable luxury models broadens substantially. Moving up to a midlevel model typically brings additional equipment, too. Moderately priced possibilities include the Acura TL, BMW X3, Cadillac CTS, Chrysler 300C, Infiniti G35, Jaguar X-Type, Lexus ES 330, Lincoln LS and Saab 9-5.

Certified Pre-Owned Luxury Models

Second-hand luxury vehicles were among the first to enter certification programs sponsored by their manufacturers. For people who can't manage the cost of a new one, a certified pre-owned luxury model can be a sensible alternative to a brand-new vehicle.

In fact, quite a few buyers who could easily afford a new luxury car purchase a certified pre-owned model instead. That way, someone else has taken the brunt of the hefty initial depreciation that every vehicle suffers. You're not getting a brand-new automobile, but because certified vehicles are thoroughly inspected and come with appealing warranties, you get almost as much peace of mind as the buyers of comparable new models.

Turning to a certified pre-owned vehicle also makes it possible to drive home in a classier model than you could purchase brand-new. Instead of the modestly equipped base model in a given line, you might be able to afford a midrange or even a top-of-the-line automobile, provided that it's a couple of years old.

Naturally, you have to pay a premium for a certified used vehicle, which ranges from several hundred to several thousand additional dollars. At the luxury end of the market, the differential is likely to be in the thousands. However, that's probably still a lot less than a new one would cost. For more information about manufacturer CPO programs, click here.

One warning, though: For late-model luxury automobiles with especially strong resale value, a top-notch used model could actually be priced at a level that approaches the cost of a new one.