A thought-experiment: say you wreck your car, and your insurance provider is going to give you a loaner.

They want this loaner car to impress you (the cost of one regular car, however nice, is not much skin off their back, especially if they get to amortize it over all the people they lend it out to; and they want to give you the impression that they've got enough money to cover any problem you might have, so that you'll keep paying your premiums--the same reason bank lobbies look so "stately.")

However, they don't want to spend too much, because there's a point where cars switch from regular goods, to being Veblen goods. (http://en.wikipedia.org/wiki/Veblen_good)

The optimum between impressing you the most, and avoiding spending way more than the car "should" be worth for an any marginal gain of impressiveness, should define the type of car they loan out (and it does, in my experience.) You can draw the "luxury" inflection point as being exactly the next-most-expensive models up from these, where the value proposition stops making sense to economically-rational actors.