Why do luxury cars cost as much as entry level Hondas?

For example 2005 Mercedes S class cost $5k same as 2005 Honda Accord.

The stash inside

A luxury car is about advertising your wealth and status. Nothing tells people you are successful like a brand new S-Class. But this is only good for a few years. When that luxo-barge starts getting old, it just says you can't afford a new one and you are a try-hard wannabe. So they tend to get dumped after a few years - typically when the warranty runs out - and nobody wants them. The reason being, a 10-year old Benz costs just as much to run as a new one, and parts/labour charges are equally extortionate. This limits the number of people interested or able to own(run) one. So the market for these cars gets even smaller, and suddenly there's an over supply of expensive to own and operate vehicles that will break the average person when it goes wrong. Benz in particular have also seen a massive drop-off in quality since 2000. The old Benzes were bullet proof, the new ones start falling to bits as soon as the warranty runs out, and they HURT your wallet when they do. Hondas on the other hand are relatively cheap new and the used market for them is steady, so their used value is far more stable.

Luxury vehicles' values depreciate faster than in-demand consumer vehicles such as Honda due to the fact that used luxury vehicles are very expensive to maintain and repair. Furthermore, older luxury vehicles aren't really popular with people who want the social status image that a brand new luxury vehicle provides.