FRANKFURT, Germany -- Whatever happened to the days when
luxury cars were luxury cars and everything else wasn't?
Now it seems everyone talks of being in the luxury game or sitting on
the sidelines learning moves from the industry leaders. To distinguish
the new midsize Mazda6's interior from its rivals, the automaker studied
BMW and Audi -- not Toyota and Honda. And usually pedestrian offerings,
such as the all-new Chevrolet Malibu, feature options found only a few
years ago on luxury cars.
Joe Sixpack brands like Chevrolet and Mazda, among others, are
mimicking the kings of the gilded automotive universe, blurring the line
separating luxury cars and trucks from the rest. The trend is
accelerating as more automakers, hungry for a competitive edge, co-opt
the accoutrements of the luxury business and call them their own.
You want leather seats? You can get them on the new Malibu.
Electric moonroofs? You can find them almost anywhere, not to mention
six-CD changers, automatic climate controls and power windows. Pickup
trucks now can be had with remote memory seating that adjusts
automatically before the door opens. Some of the latest gadgets, such as
navigation systems and satellite radio, are as easy to get on a Pontiac
as a Mercedes-Benz.
"There are few things you can get only in a luxury car," said James
N. Hall, vice-president of industry analysis for AutoPacific Inc. in
Southfield. "Luxury is about image."
It's also about making money, because fatter profits are in luxury
cars and, especially, luxury trucks.
The luxury vehicle business in the United States, the world's richest
auto market, is expected to grow 3 percent each year over the next
decade, industry executives predict. Volume brands are on track to grow
more slowly, explaining why everyone from BMW, Mercedes and Jaguar to
Lexus, Infiniti, Volvo and Sweden's beleaguered Saab are rushing to
expand their product lineups.
Even Porsche, the tiny German sports car maker, is jumping into the
act with its Cayenne sport-utility vehicle. Audi is expected to take the
wraps off its version of a sport-ute at this year's North American
International Auto Show, while its sister brand, Volkswagen, debuts an
SUV that is intended to usher the "people's car" deeper into luxury
territory.
"There are no more lines and definitions like there used to be," said
Charles Waterhouse, Volkswagen of America Inc.'s director of product
planning.
Consider that VW later this year will offer a $62,000 Phaeton luxury
sedan that matches the Mercedes S-Class and BMW 7 Series item for item.
Mercedes sells $25,000 C-Class sports coupes and is talking about
bringing a next-generation version of its A-Class to the United States
-- for under $20,000 -- even as BMW is working on its new 1 Series.
The global industry's luxury brands, particularly those from Germany,
are being stretched to their limits. Critics say the moves risk diluting
brands like Mercedes and BMW after years spent building them. With the
market growing more broadly upscale, however, those same leaders crave
higher-end market positions with exclusive vehicles priced well above
$100,000.
DaimlerChrysler AG revived
the moribund pre-war nameplate, Maybach, to create a posh limousine
positioned above Mercedes. The move is partly a response to BMW's
acquisition of Rolls Royce and VW's play for Bentley and Bugatti -- all
of which have new products destined for showrooms around the world.
The Americans are even getting into the six-figure game. Ford Motor Co.'s Ford GT, derived
from the world-beating GT 40 of the 1960s, will sell for more than
$100,000. And General Motors
Corp.'s Cadillac is mulling plans for a V16-powered supercar.
Yet the competition is about more than powerful engines, dazzling new
electronics, wood inlays and chrome bezels. As proliferating technology
erodes the separation between volume and luxury brands, leveraging brand
image and service before and after the sale are likely to determine
success on the road ahead.
Affordable luxury
Andrew Athens, a family physician in Taylor, learned that lesson
first hand. Seeking a premium hatchback offering more space than a
traditional sedan, Athens was interested in a 2002 Saab 9-3, among other
models. He made an appointment with a dealer in Oakland County, showed
up on time and then waited while his sales associate helped someone
else.
To kill time, he drove to the nearby Lexus dealer. They greeted him
warmly, offered him coffee and answered his questions. He never returned
to the Saab dealer and instead ended up with a Lexus IS 300 Sportcross,
his first car not made by a Detroit automaker.
"I was more impressed by the service and how they treated you. Part
of it was you got more for your money," he said, ticking off the
features found on most entry-level luxury cars -- and a growing number
of volume-brand cars. "And Lexus had more to offer me."
It's less important that Toyota
Motor Corp.'s Lexus shares most of its parts with its sister brand,
Toyota. Or that Lexus-brand cars, which first debuted in 1989, don't
exist in Japan and have been struggling until recently in Western
Europe.
Lexus delivers an attainable experience for Athens, 47, who couldn't
afford luxury cars when he arrived in Michigan 20 years ago. Those days
are gone, thanks to cut-rate leasing, aggressive incentives and a wide
range of entry-level luxury cars like the Lexus IS 300, BMW 3 Series,
Audi A4 and Cadillac CTS.
Now, luxury cars and trucks are more affordable than ever. Both aging
baby boomers and increasingly younger buyers accustomed to the good life
are snapping up luxury cars in what the top Lexus executive in the
United States calls the "democratization of affluence." The average age
of a Lexus IS 300 buyer is 32 years old.
"People are buying luxury," said Denny Clements, group vice-president
and general manager of Lexus. "Someone is turning 50 every 8 seconds.
You're at your peak earning and spending years. The kids are off to
college and you're inheriting significant chunks of wealth."
Expanding range
Cadillac wants a bigger piece of that cash. GM's luxury division is
in the midst of a new-product push that slowly appears to be remaking
the face of the brand that became synonymous with fat and sloppy
American luxo-boats. But don't expect to see Cadillacs sized for
twenty-something graduate students.
"I want high school kids to dream about owning a Cadillac," said Mark
LaNeve, Cadillac's general manager. " I don't want them to own it."
BMW and Mercedes, both of which evolved into luxury-car powerhouses
thanks to expanded model lineups, now are extending their respective
brand images into an even broader product range to seize and retain
lifelong customers.
That means "going down" into market segments -- $20,000 or lower --
that rivals Cadillac and Lexus say they are not interested in exploring.
Their fear: selling a Cadillac or a Lexus for the prices similar to a
Chevy or a Toyota would only hurt the brand images they are trying to
protect.
BMW and Mercedes think they have the brand cachet to pull it off. The
initial draw is expected to come from entry-level "premium" cars -- the
new 1 Series or next-generation A-Class -- followed a few years later by
upscale versions of mid-size sedans or sport-utes.
"The luxury aspect of BMW is only partly defined by the product and
just as much by what BMW stands for," said Susan Jacobs, president of
Jacobs and Associates, an automotive consulting firm based in New
Jersey. "Luxury marques are distinguishing themselves in a non-product
dimension."
Almost luxury
Gene Stefanyshyn doesn't work in those dimensions. As GM-North
America's vehicle line executive for midsize cars, the self-described
"chicken noodle soup kind of guy" is charged with delivering Chevrolet's
new Malibu sedan on time, on budget and at a price that Chevy kind of
people can afford.
Still, the all-new Malibu, based on GM's Epsilon architecture
underpinning the new Saab 9-3 and Opel Vectra in Europe, will offer the
kind of equipment Chevy buyers wouldn't have likely found on a Malibu
five years ago.
How about remote starting? It's not on the current Malibu, but it'll
be available on all models and a standard feature with the LT package.
Same for XM satellite radio and GM's Onstar global communications
system.
"The technology is trickling down, which is the way technology
works," Stefanyshyn said.
The Malibu will offer automatic air conditioning, a luxury car
staple. Heated seats will come when customers order leather seats,
expected to be 25 percent of the 240,000 Malibus GM plans to build in
the first full year. Also available will be adjustable pedals and a
driver information center.
Not that Stefanyshyn is suggesting the new Chevy Malibu should be
considered a luxury car. Given Chevrolet's decades-long pedigree of
being a "value-for-money" brand, it wouldn't pretend to be -- even if it
looks to be another mass-market car touting luxury-car amenities.
"By the amount of volume we're going to do, the Malibu is never going
to be exclusive," he said. "And if it's not exclusive, how can it be
luxury?"
You can reach Daniel Howes at mailto:dchowes@detnews.com
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