Forget Leather and Wood; Automakers Struggling to Redefine Luxury

Focus shifts to the “total customer experience.”

by on Jul.21, 2016

Lincoln will increase its suite of customers services with the launch of the new Continental.

Leather, wood, a big engine and lots of chrome. Those have been the traditional signatures of a luxury car. But what happens when you can add those same features to an entry-level sedan? That’s a question high-line brands have been struggling to deal with as they face increasing competition from more mainstream manufacturers.

That new reality is forcing luxury marques to shift focus a bit. You’ll still find massaging leather seats on a Mercedes-Benz S-Class, open-pore wood on a BMW 7-Series, and a choice of high-performance engines for your next Audi. But you’re likely also to find a variety of new features and services designed, among other things, to simplify and speed up the car buying and service processes.

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What a Luxury!

“Because so many things that used to be considered luxury are now available across the line, the only way to differentiate yourself as a luxury manufacturer is to make the total ownership experience painless and seamless,” said Joe Phillippi, senior analyst with AutoTrends Consulting.

Make no mistake, product still matters, and so do those traditional luxury accoutrements. You’re likely to get a lot nicer leather and wood on an $80,000 car compared to that midsize, mainstream sedan. But high-line manufacturers have come to recognize that affluent buyers want to feel special. They also want more of what’s in shortest supply: time, said Kumar Galhotra, the president of the Lincoln Motor Company.

Ford’s high-line brand has been struggling to regain its once-lofty position in the market by emphasizing what it calls the “Lincoln Way,” the company explains, “making every experience feel warm, human and personally crafted.”

"We will honor our owners' time," says Genesis boss Erwin Raphael.

It is offering a concierge, for example, that can handle a variety of services, even helping set up a “date night.” Starting with the launch of the 2017 Lincoln Continental, all new models will get standard pickup and delivery – along with a free loaner – when the car needs to go in for service or repairs.

(For more on the new Lincoln program, Click Here.)

As Hyundai splits off its most upscale models into the all-new Genesis brand, it will also offer valet pickup and delivery, as well as free scheduled maintenance for three years. And owners will be given a choice of three different ways to schedule an appointment: by calling a dedicated Genesis hotline, through the Connected Services feature built into the vehicle, or by opening up an exclusive Genesis smartphone app.

“Respect and courtesy are the foundation of the Genesis Experience. We will honor our owners’ time through streamlined processes that put their needs first,” said Erwin Raphael, general manager of Genesis in the U.S. market.

High-tech systems allow manufacturers to create a variety of new features and services. That’s changing not only the way owners handle service but how they buy a vehicle in the first place. Mercedes-Benz is launching a new online system that will allow buyers in Germany to complete the order process entirely online.

BMW will follow up with new 7-Series owners to make sure they can use the car's tech features.

“Customers would like to come into with a premium brand everywhere and at any time. They expect more and more digital information and interaction possibilities,” said Ola Källenius, the Daimler board member in charge of Mercedes-Benz marketing and sales. The new system, he said, is taking a further step towards the sales of the future.”

Unfortunately, for tech-savvy American motorists, state franchise laws currently prohibit online buying of new cars, though manufacturers are walking closer and closer to that process. They’re also setting up non-traditional showrooms – like the new Lincoln Experience Center in Newport Beach, California. Tesla has bucked those franchise laws in a number of states by setting up unique, factory-owned showrooms, often in unusual locations like shopping malls.

(Tesla reveals new Master Plan, Part Deux. To see what’s in store, Click Here.)

Today’s cars are rapidly becoming computers on wheels, with more electronics onboard than you’ll find in the typical home or office. Until recently, most high-tech systems debuted on the highest end of the luxury spectrum, only eventually working down to mainstream models. But “technology is being democratized,” said analyst Phillippi, sometimes appearing first on lower-priced products targeting tech-savvy younger buyers.

There’s a downside to technology, according to industry studies. Complaints about high-tech systems far outnumber traditional quality problems, according to the latest J.D. Power Initial Quality Survey. But that actually opens up an opportunity for luxury makers.

BMW, which launched its newest, tech-laden 7-Series sedan for 2016, wants to make sure buyers aren’t overwhelmed and frustrated by all that gear. The maker now schedules a follow-up appointment with 7-Series buyers — at their home or office — a week or two after they take delivery. The idea, explained BMW North America CEO Ludwig Willisch, is to make sure they fully understand all the new systems on their vehicle and how to use that technology.

That is expected to translate into greater customer satisfaction and increased loyalty – which translates into repeat business when it is time to trade in.

(New study names customers’ “ideal vehicles.” Click Here to see why Tesla, GMC, Volvo and Subaru come out on top.)

While luxury brands are making the biggest push into providing time-saving services, don’t expect mainstream marques to sit on the sidelines, cautioned Renee Stephens, a senior analyst with J.D. Power. As with leather seats and wood trim, these services are also being “democratized,” she said.

“We’re seeing some of the same services begin to be offered on non-luxury vehicles,” said Stephens, adding that, “It will become tougher and tougher to differentiate a true luxury experience from a non-luxury experience.”

 

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One Response to “Forget Leather and Wood; Automakers Struggling to Redefine Luxury”

  1. Rod Schwartz says:

    Hyundai USA needs to take much better care of its dealers.

    Granted, Hyundai builds some great, great cars. I speak from experience as the owner of both a Genesis and an Azera (my daughter also owns an Azera) – all bought from the same dealer in Lewiston, Idaho.

    Problem is, that dealer sold to the Kendall group, Kendall wanted to move Hyundai to a different showroom (Kendall owns three dealerships in that town), and Hyundai said No, effectively pulling the plug on their brand representation in our region. So now, the nearest Hyundai dealer is in Spokane, 80 miles from me (and 125 miles or more from folks in the Lewiston area). Sorry, Hyundai, you won’t sell me any more new cars if you’re going to make me drive that far to buy one. I have choices in every other brand close by.

    It’s a heck of a way to treat the thousands of people in our area who purchased new Hyundais from the Lewiston dealership – and I’m told by two different former Hyundai dealership owners/managers that Hyundai USA makes it hard to do business. One territory manager covering 5 states, where Toyota has at least one per state. Paying dealers their rebates on a monthly basis instead of weekly, as other companies do, is another problem. I’m told it’s the cost of being a Hyundai dealer – but as a customer who’s been among the brand’s biggest fans, this just reeks, Hyundai!

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