I think on the whole you have the comparisons right. There's nothing wrong with a Mercedes or comparable (not talking about their SLR's, those are every bit as awesome as a Ferrari, maybe more so) and in fact they are lovely cars, luxurious and usually reliable. There's also nothing wrong with a Toyota Celica or if you have the cash, a Maserati. What for some is plenty is for some not nearly good enough, and I'm not the one to judge really.
On the whole, luxury watches are usually fairly overpriced when it comes right down to it, but ultimately it's a matter of supply and demand, as well as buying experience. I doubt that there's any real reason why Busse or Chris Reeve couldn't cut their prices in half and still make money, but that's not really the point; they are happy where they are, and their customers still line up at the door at those prices. When speaking of really fine watches though, it's interesting to note that the really fine ones like Breguet, Patek, Lange, etc. don't have a clear analogy in the car world. Frankly, if one were to build a car that required as many man hours and as much precision as one of those watches, one would be looking at at a minimum a Bugatti, probably even a customized souped up Bugatti, rebuilt piece by piece. More likely you're looking at something like a Formula 1 car as a comparison, especially for highly complicated watches or tourbillons.
Also it goes without saying that pretty much no car on Earth is going to last, for all intents and purposes, several generations of regular use, regardless of how well or often you maintain it. More than just marketing spiel, it's really true that a Patek, a Breguet, or for that matter even a Rolex or Omega can become an heirloom passed on to descendants of yours that you'll never meet.
As for how much things cost, well I guess there's two ways to look at it. On the one hand, you have dollars for performance, in which case anything above an Omega chronograph (which is already surpassed, in reality, let's face it, by a Seiko, which is already surpassed by a Casio) is asinine and a waste of money. There's nothing wrong with that school of thought, and ultimately that's why a lot of people love Spyderco, Buck or Kershaw.
On the other hand, you can ignore dollars for performance, or at least put them as a secondary priority, and go for something else that is very hard to describe, but some people feel tangibly in their hands. For some people, nothing but at a bare minimum, a Sebenza will do, even though they could accomplish whatever it is they want to accomplish with a Bradley Alias, or even a sharpened piece of sheet metal. The same goes with watches; sometimes it's the feel of the watch, sometimes it's the knowledge that it's made of fine materials and decorated in a certain way, and sometimes it's the knowledge that hundreds of highly skilled man hours came together to make something that is, at a particular pricepoint, the pinnacle of a craft. And for some people that's all turgid nonsense, and they're fine with the corner drugstore Pakistan special. I think that's going a little too far, but again, I'm probably not the best judge.
But there's a really interestingly fine line between connoisseurship and conspicuous consumption. Three guys might be standing at a street corner shooting the breeze. Three cars drive by: a Nissan Z, which for one guy is the bee's knees, a Lambo Murcielago, which is the shizzle for the second guy, and then a Ferrari P4/5 (
http://en.wikipedia.org/wiki/Ferrari_P4/5) drives by and the third guy creams himself. Who's right?
