Welcome back to another edition of Car Facts, where I answer your questions about cars and the automotive industry.
In today’s article we are looking at why auto manufacturers offer different trim levels on cars, rather than building separate models.
As with many practices in the automotive industry, this ultimately comes down to one thing … money.
However, it’s still worth understanding why and how trim level options are so important to a manufacturer’s lineup.
Keep reading to find out more!
Table of Contents
What Are Trim Levels?
In case you’re not sure of the meaning, the term ‘trim level’ refers to a vehicle’s level of equipment or features.
For example, take a car like the Toyota Corolla (read our history of the Toyota Corolla here).
If I wanted to go and buy a new Corolla today from Toyota New Zealand, I would have the following ‘trim levels’ to pick from:
Broadly speaking:
- GX is the base trim level
- SX is the ‘mid spec’ trim level
- ZR is the top-of-the-line trim level
As you step up the different trim levels, what is fundamentally the same vehicle platform will come with varying degrees of improved specification/kit. Using the Corolla example above, the trim level affects:
- Interior materials (e.g. cloth vs leather)
- Wheel size and style
- Infotainment options, e.g. the higher spec Corollas come with a premium JBL sound system
- Fitted safety equipment
Until recently, in the NZ Toyota Corolla lineup the choice of trim level would also affect engine options. A base model Corolla could come with either a petrol or hybrid engine (and if I recall, you could have petrol in any trim level apart from the top-spec … don’t shoot me if I’ve got this wrong though) but now the range is hybrid-only.
Different manufacturers have their own naming schemes for trim levels (which will often be consistent across the brand’s lineup, e.g. a ZR Yaris is the top-of-the-line Toyota Yaris, as it is for the Corolla) and there is no one-size-fits-all rule as to what exactly a trim level entails.
Trim level names can also vary from market to market!
Here’s an example of trim levels for the new Kia Sportage, at least with respect to the New Zealand lineup. Here you can see that trim level affects engine, 2WD/AWD and more. There are actually eleven different trim levels you can pick from, and then options within those trim levels as well!
What this means is that Kia can sell the Sportage here in New Zealand “from $39,990” (meaning that someone with a budget of $40,000 can just sneak in) but pricing goes all the way to $63,000 for a top-trim level AWD diesel model, sold as the “X-Line DSL’.
Versus options and packages (which I’ll cover more in a moment) one of the biggest differences with a trim level is that it will usually affect the badging of the car, with the trim level e.g. “LX” or “GT” or “R-Line” usually featuring somewhere on the car. The same doesn’t apply for options and option packages.
What’s An Option Then?
In the most general sense, an ‘option’ on a car is usually a single feature/item that you can choose to add.
For example, when I purchased my Suzuki Swift Sport, there wasn’t any different choice of trim level (i.e. there is no base Swift Sport vs premium model … you just pick your colour and transmission option).
However, there were a couple of ‘optional extras’ (options for short) that could be purchased individually, e.g. two-tone paint and a sticker/decal kit.
That’s probably not the best example (as having a black-painted roof is hardly the world’s most exciting option) but it’s relatively fresh on my mind.
European car manufacturers, particularly premium brands like Porsche, are notorious for making just about everything desirable an option (which you either buy individually, or by adding on an option package – which I’ll explain in the next section).
For example, the car might offer a basic speaker system, but for a couple of thousand dollars extra you can opt for the premium sound system.
Different options can be very desirable to secondary/tertiary owners on the used market as well. For example, take a car like the Lexus LS460 (read our LS460 buyer’s guide here). The new purchaser could have specified their car with the excellent Mark Levinson sound system, which is a desirable option for used buyers as it is much better than the already-good base stereo option.
Even if you take a top-spec trim level car, there will often be various options available. Sometimes options will be restricted to a specific trim level, e.g. you can’t have the premium sound system on a base level car.
How About Packages?
Packages are generally a bundle of different options grouped together which you can purchase, often representing better value for money than buying the component options individually (although some manufacturers also just do this to force you to go “all or nothing” on the options).
For example, you might be able to purchase a “sport package” or “performance package” for your car, which will often include improved suspension components, better brakes, possibly engine tweaks, and even aesthetic enhancements.
Safety packages are another common option area (perhaps becoming less common as safety tech becomes more ubiquitous across even budget vehicles).
A ‘luxury package’ might bundle leather, a better air conditioning system, superior audio system etc into one price.
Once again, what is included in a package will vary greatly from manufacturer to manufacturer.
With respect to trim levels, as you move up the trim levels/grades in a car more package components that were optional on lower grades might be included in that higher trim level. On the other hand, a package may only be available as an add-on to a specific trim level.
Do All Cars Have Different Trim Levels?
No, not every car has varying levels of trim.
If I use the Suzuki Swift Sport example, there is just one “level” to that car (the only real distinction being whether you want auto or manual). There is no Swift Sport “Plus” or anything like that.
I guess you could argue that the Swift itself is a range of different trim levels, from the very basic models through to the Sport at the top-of-the-range, but Suzuki themselves market the Sport as a separate model. This is similar to Volkswagen, who have the Golf, Golf GTI and Golf R. Realistically, the Golf GTI and R aren’t just trim levels to the standard Golf (which has its own trim level sequence, e.g. Comfort-line and R-line).
Once again this all depends on the manufacturer and their sales strategy.
Why Do Car Manufacturers Offer Different Trim Levels, Options & Packages?
To make more money … it really is that simple.
Offering different trim levels is great business for a few different reasons, but all of them come back to allowing the manufacturer to sell more cars and increase their profits.
Here are a few ways that trim levels, options and packages can help car manufacturers to sell more units and make more profit:
- Top trim levels can massively increase the profitability of a sale. I can’t find the exact numbers (I’ll update this article when I do) but I recall reading once about the difference in cost to Ford UK back in the 1980s in terms of selling a base model car versus a top-of-the-line ‘Ghia’ model. Long story short, it cost Ford a few pounds – some astoundingly-low figure – to be able to generate well over a thousand pounds of additional profit. In other words, you might pay an extra $10,000 for a top trim level model, but the cost to the manufacturer of giving you leather instead of cloth, a sunroof, and a 12 speaker sound system instead of a 6 speaker is a fraction of that. You feel like a winner, because you’ve got the nicer car, and the manufacturer has made more profit. Because of how much extra profit a higher trim level or option package can add, this is one of the reasons why dealerships will typically push so hard to get you to upgrade during the purchase process. You go in looking to spend no more than $40,000 NZ on a base spec Kia Sportage, but the salesman convinces you that it’s worth it to spend $3000 more to get the much better specification deluxe model. After all, what is $3000 more on a $40,000 purchase, especially if you’re paying it off over five years? (that is how the psychology works).
- Having a lower-priced, lesser-specification base model makes the car more accessible to buyers on a tight budget. Using the Corolla example from above, there is about a $7000 NZD price difference between the base model Corolla and the top-spec (there used to be an even greater difference when you could buy petrol-only models). A buyer might be able to afford the base model but not stretch to the more expensive trim levels. If there was no base trim, then that sale might never be made.
- Having a higher-priced, better-specification model model makes the car more appealing to buyers who want a premium vehicle. On the flip-side to the point above, there are buyers who don’t want to be seen dead in a base spec car. A base spec Camry with cloth seats? No thank you … but a fully-loaded one with leather and premium sound system might fit the bill. By offering the “discerning” buyer a higher trim level at a premium price point, the manufacturer can win their business and make more profit at the same time.
- Having lower-priced, lesser-specification models can be great for fleet sales e.g. company lease cars and rental car purchases. Once again using the Corolla example, the now-discontinued base petrol car was one of the top selling vehicles in New Zealand year-after-year. However, most of those sales weren’t to private buyers (who would often go for the better trims) but instead to rental car companies. Do a company’s travelling sales reps really need a “fully loaded” car? How much more can a rental car company charge per day by having leather seats vs cloth? For large-volume buyers, base spec cars make great sense.
- Offering trim levels and different options expands the brand’s range at a lower cost. You need to bear in mind that it is insanely expensive to develop and launch a new car. Every single model that a manufacturer releases is a gamble. A calculated gamble, for sure, but a gamble nonetheless. Offering trim levels and differing specs via options/packages within a specific model means you can broaden the appeal of that model (by selling a basic version at a lower price point, or shifting a premium trim/spec for more money) rather than having to develop two separate cars. Basically, the manufacturer can have a narrower model range but more depth within the range by offering options on each model.
Recap – Why Do Car Manufacturers Offer Different Trim Levels?
Hopefully this article has given you a good understanding of the ins and outs of trim levels, options and packages. I’m actually going to create some more articles that go into greater depth around options and packages specifically, but for now this should give you clarity into the differences between these terms.
More importantly, you should have a better understanding of why car manufacturers even bother selling different trim levels, options and packages in the first place.
As with most things in the auto industry, it all comes down to selling more units and making a greater profit per unit – but hopefully I’ve done a decent job of explaining how trim levels and options/packages can influence sales volume and profitability.
Thanks so much for reading. If you have any questions, feel free to comment below.
