Customers' luxury motivation turns to self-reward, execs say

Michael Bartsch: "All the research is showing a very different mindset after the recession."
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NEW YORK -- The definition of luxury automotive brands, and the motivation of luxury-car shoppers, is changing from a look-at-me display of wealth to a self reward for achieving success.

That was the conclusion of a panel of luxury-brand executives at the NADA/J.D. Power Automotive Forum here today. Executives said that pushes to smaller front-drive vehicles, alternative powertrains and the entry of new vehicle types like crossovers have irreversibly shaken up automotive luxury.

“All the research is showing a very different mindset after the recession,” said Michael Bartsch, vice president of Infiniti Americas. “Conspicuous consumption has shifted to self reward.”

That reward is pushing luxury makers into new areas, as consumers define for themselves what a premium vehicle means. Scott Keogh, president of Audi of America, noted that innovations like aluminum bodies, all-wheel drive and four-cylinder engines have gained significant share.

For some makers, that can require a change of brand image. Steve Cannon, CEO of Mercedes-Benz USA, said the brand has to go beyond its traditional image of making big, rear-wheel-drive cars.

“Our challenge is going to be to change the definition of rear-wheel-drive luxury because the future is going to demand it,” Cannon said. Smaller and electric-drive vehicles are likely to play a bigger role in luxury lineups, he said.

But, he added, that will expand brands’ market coverage. With the front-wheel-drive compact CLA, Mercedes has successfully attracted younger buyers, Cannon said: “They’re 10 years younger. In one fell swoop, we got 10 years younger with the CLA.”

Likewise, Uwe Ellinghaus, chief marketing officer for Cadillac, said that electric drive can be a luxury selling point: “Probably electric drivetrains someday will become more of a quality statement than a green statement.”

There was disagreement on the power of brands. David Zuchowski, CEO of Hyundai Motor America, said that his brand’s price advantage makes a difference: “The customer actually looks in price bands and payment brands.”

But Mercedes’ Cannon said that “drivers’ image is still what draws the segment.”

You can reach Dave Guilford at dguilford@crain.com. -- Follow Dave on


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