I was thinking about the best way to answer this as someone who's owned two Land Rovers and have owned upper luxury cars for most of my driving career. Keep in mind, with the exception of our current Alfa Romeo, 100% of them were bought used - a number of them were actually given to me for free (granted in need of work).
Studies by some people who study these things more than me have determined that decision making is emotional. Obviously there is a practical aspect, but that can drive some level of emotion. Spending money that you don't have and can't afford to spend tends to cause stress, so that's a negative emotion we want to avoid. Maintenance issues cause stress. Some don't like the emotions that go with what they perceive as a flashy car, or a gas guzzler. Etc.
When you look at it through the lens of an emotional decision, then you're buying it because it provides you with positive emotions, or at least more positive emotions than negative ones. It makes you feel good. Maybe it's how the car makes you feel when you look at it, maybe it's how you feel when you look at, touch, and feel the interior. And yes, there are a number for whom the positive feeling is how they feel when they perceive people seeing them in their status symbol of a car. Practically speaking, no, they don't do anything that you can't do with a cheaper alternative. If you can afford to spend the money, then that cost doesn't bother you enough to outweigh any of the other issues. Cars are not strictly utilitarian or practical for all people, even people who aren't necessarily auto enthusiasts. If you want a vehicle that is strictly practical and does the job, look at what was created by the Soviets, and realize that none of us want those.
Like I said, I've owned upper luxury cars for almost my entire adult life. My first car was a 1982 Jaguar XJ-S V12 that I bought for $1,000. I've owned close to a dozen Jaguars over the years, two Land Rovers (a '97 Range Rover 4.6 HSE and now the '97 Discovery), some Mercedes and BMWs, couple Cadillacs and a Lincoln, and we now have the Alfa Romeo. I'm sure I'm forgetting a few. I've also owned my share of standard types, as basic as my C2500 retired work truck with vinyl seating and no cruise control. I think it came with an AM/FM radio. All of the luxury cars I've owned except for the Alfa were purchased used (I'll get to finances in a bit).
I couldn't care less about being seen driving any of these things. For the amount of **** I've gotten over the years, it would've be easier to just drive more unassuming cars that didn't get attention. But despite being an engineer (and thus a practical being devoid of most emotions - and certainly lacking any ability at humor), it's vehicles that stir my soul. No, they don't have to be expensive - a Mustang is a plenty fun car, and I've loved my couple of Excursions I owned, plus my diesel Rams. But, the higher end vehicles do tend to get more attention to detail when it comes to interior design and materials. The driving experience (and I'm talking feel, not numbers) is generally better with these higher tier cars - and specifically with the highest level ones, and they do have more of the little details that improve the experience. Basically, I love the way these vehicles make me feel when I drive them - all of them. It's about the driving experience. Back before I had my driver's license, one of my cousins 15-20 years my senior (someone who has given me a lot of advice over the years - all of it wrong) told me that driving would become a chore and I would find I wasn't so excited about it after a while. Of all the dumb things he's told me, that was probably the dumbest (or at least the most wrong). But, I'm not driving a newer front wheel drive Chevy Malibu. I'm driving cars that make me smile when I look at them before getting in, that excite my skin when I sit down and touch the interior, and that stir my soul when I push the gas pedal.
If bought right and if you have the inclination and skill to work on them yourself, they can be fairly practical. The values fall faster from new than an Aztec in a slip with full flaps, and so it doesn't take long before used examples are for sale much cheaper than same year, same mileage counterparts in the "normal" makes. I'm glad to see so many people who aren't interested in buying those - it means more are out there for me to buy.
When my wife and I got married, she had thought that there wasn't anything to these upper end cars. She absolutely does not care about "being seen" in one, and if anything doesn't like driving something that gains extra attention. Her first upper luxury car was a '97 BMW 740iL (bought with 140,000 miles for $4k). Yes, it needed work, and I got that work done. But that also really showed her that there was, in fact, a difference in how those cars drove. She loved it, she loved my E55, and then when it was time to get a replacement for her SUV, she wanted a GL550. Now we have the Alfa Romeo Stelvio Quadrifoglio. We both absolutely love driving the car, and it makes me smile to look at. We've owned it for a year and a half and had a few minor issues, but has only been to the dealer once for an oil change.
Will it depreciate? Of course it will. But we're keeping it a long time, and because nobody wants to buy an Alfa Romeo, we bought it for a significant markdown from MSRP during a time when most people were paying well over MSRP. It was actually a good value, and much cheaper than we would've spent on a new Jeep Wagoneer (or especially a Grand Wagoneer, or even a Grand Cherokee with a Hemi). With used car values at the time, we sold our 22 year old XKR for a profit vs. 2 years prior when I'd bought it, and sold our GL550 for what we paid for it 4 years and 40k miles prior.
It was both an emotional and practical decision.
