Image: Mercedes Benz 2005 SL65 AMG
Ted Soqui  /  Corbis
The Mercedes Benz 2005 SL65 AMG features a twin-turbocharged, 6.0-liter V-12 with 604 horsepower. The car has a base price of $179,000.
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updated 1/25/2005 4:49:02 PM ET 2005-01-25T21:49:02

When Mercedes-Benz puts its new CLS55 AMG sedan on sale early this year, it will have 12 limited edition AMG hot-rods in its lineup.

That means Mercedes, which is owned by DaimlerChrysler will have more AMG-brand vehicles than many automakers have total model lines — including upscale companies such as Porsche, Audi, Honda Motor's Acura subsidiary and Nissan Motor's Infiniti brand.

But Mercedes is not alone in offering these limited edition, very expensive, high-end performance cars. BMW has been selling its M cars in the U.S. since model-year 1987, and a number of carmakers are finding that offering their own hot-rod brands provides them with exciting vehicles that can make both car buyers and shareholders happy.

Today, in addition to AMG and M cars, there are Cadillac's V-Series models, Audi's S cars and R cars from Ford Motor's Jaguar and Volvo subsidiaries — all brand names for luxury hot-rods. Porsche puts the letter "S" after the names of certain high-performance models, and Acura has high-performance accessories packages that it calls "A-SPEC" models. Even non-luxury marques have gotten in on the action, such as Mazda's Mazdaspeed cars and Mitsubishi's Lancer Evolution. The Lancer Evo has several models and, like Subaru's WRX hot-rod sedans, could be called its own brand.

The cars in the slide show are extremely high-end and high-performance vehicles. In some cases, they increase the power and torque of their base models by 100 percent or more. BMW's forthcoming, 507-hp M5 hot-rod sedan, which will go on sale this fall, will look impressive next to the 184-hp entry-level model in BMW's 5 Series sedan line, the nameplate of which the M5 will be the flagship.

In the slide show, we included Volvo, whose cars are less expensive than the others in the group, but whose direction overall is becoming more luxurious. The brand is trying to ape AMG with its hot-rod R cars — of which only two models currently exist. It's an interesting attempt to inject more life and sex appeal into a brand.

Unlike some of the other brands, however, AMG makes money by tuning cars that already exist, which keeps the overall cost of each car in check. It makes the vehicles popular enough to sell for stratospheric prices, which generates handsome revenue. Last year, 40 percent of AMG vehicles sold in the United States cost over $100,000. Only four of AMG's ten current models sell for less than six figures.

Other car makers are thinking about throwing their hats into the hot rod ring. Toyota Motor's Lexus subsidiary would like to offer a car that would allow it to climb upward from the $20,000-$70,000 price bracket in which it currently competes. At this month's North American International Auto Show in Detroit, Lexus unveiled the LF-A sports car prototype, which has a top speed of 200 mph and 500-plus hp — an indication that an exotic Lexus may be around the corner.

It is important to make the distinction between vehicles such as AMGs and BMW's M cars and extravagant or fanciful one-off flagships such as Porsche's Carrera GT supercar or even Land Rover's Range Rover. Upscale hot-rod brands generate extremely expensive, refined, souped-up versions of cars that are already luxury cars. They are not a risk-free endeavor — after all, Jaguar has been a perennial money-loser for Ford but has four "R"-series hot rods in our slide show; the R cars alone can't salvage a company that consistently posts losses, although they can bring customers into the showrooms.

Moving up the ladder
Much of their success is based upon snob appeal. For some buyers, it's no longer enough to simply own a Mercedes, for example. The parking lots of Palm Beach, Beverly Hills and Southampton are so full of Mercedes models they practically look like dealerships. And then there is the two-edged sword of lower-priced entry level cars, such as Mercedes' C-Class and Jaguar's X-Type. A chief executive spotting a junior sales rep driving a $26,000 C-Class coupe may subconsciously regard his own $126,000 S600 sedan as being a little less special.

The beauty of the AMGs, or any of these other limited edition cars, is that there's no question they are in a league in which only the big boys can play. At the same time, though, these are not opulent land yachts, like the weak-selling $300,000-plus Maybach — also from DaimlerChrysler. The cars in the slide show are all about what you might call "stealth wealth." They offer outrageous performance for outrageous amounts of money, but in terms of looks only have subtle styling tweaks to distinguish them from the models on which they are based.

One thing that is not subtle about these cars, however, is the speeds they can attain and the thrill they will give you in doing so.

© 2012 Forbes.com

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