By Alborz Fallah
The big question going around is what exactly do you understand by the term ‘luxury’ and what in particular makes a ‘luxury car’? Is it all about the brand, the technology, the features, the price-tag, or possibly the heritage?
It’s nearly impossible to define where a mainstream car becomes one luxury or vice versa.
Is an Audi A1 (priced below Kshs.3 million) a luxury car? What about a Mercedes-Benz A180? Both are entry-level cars, and both are significantly cheaper than a number of top-spec Toyota or Nissan saloons. Yet the two Japanese brands are about as mainstream as they come; and the Germans carry a level of prestige that is hard to quantify, and even in base trim, they garner far more perceived-value than the conventional Asian brands.
Luxury as a term is set to indicate that the item in question possesses features that are beyond the basic necessities. A 1 million Shilling Swiss watch ultimately does the same thing as a 5 thousand shilling Casio, but that doesn’t seem to stop it from selling, for it possesses a quality and a set of brand values that are highly appealing. However, nowadays, there is no car on the market today that doesn’t have some level of luxury creature comforts.
However, according to some governments (Australia for example), a luxury car is entirely defined on price. So a Mercedes-Benz C250 is under the Luxury Car Tax (LCT) threshold, while a Toyota LandCruiser Prado is not. How that makes sense is a debate for another day, what is clear however, is that the idea of a luxury car remains completely undefined and appears to be entirely based on perception rather than anything tangible.
In his book titled ‘The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands’, Jean-Noel Kapferer; one of the world’s most recognised experts on branding, discusses luxury cars:
“Can a luxury car brand be developed in isolation, or only with global technical partnerships, to remain at the cutting edge? The car raises questions among luxury analysts in many respects. Noble descendant of horse-drawn carriages or coaches, it is considered the very symbol of luxury among men. The car signifies for all to see the progression and status of the driver.
The car gave birth to brands that by themselves define luxury. It brings together both old brands, with prestigious histories, created by mechanical geniuses (such as Enzo Ferrari) and newly minted ones, such as the Swedish Koenigsegg, or the Japanese Lexus, created from scratch and launched as a Luxury export in the USA in 1989 by Toyota.
Finally, in addition to the link with history, the car makes it possible to deepen the relationship between luxury and high-tech: we are too prone to link luxury with artisanship, tradition and heritage. How is this relevant in the highly mechanised and now electronic world of cars? Would they resist the examination of a modern Aston Martin or Bentley?”
Ignoring the supercars of today and ultra-luxury manufacturers for the moment, the most recognised luxury car brands globally are the three Germans: Audi, BMW and Mercedes-Benz. The three Germans have earned their reputation through a number of factors, most important of which appears to be heritage, with all three having at least 100 years each of history behind them; Audi in one form or another.
All three have also dug deep in the last decade and created cars that have significantly more mainstream appeal in terms of price and attainability. They opted to create a paradox of blending luxury values and a certain level of exclusivity, with mass-production of their cars in mind. At the same time, mainstream brands have invaded the territory of such high-end brands, by creating premium-luxury cars.
But what is considered luxury, or at least, what is considered luxury that also sells in reasonable volumes, differs enormously from one country to another, further reinforcing the idea that luxury cars are largely about perception. Globally, BMW outsold Mercedes-Benz last year, which itself only just moved past Audi for the first time since 2010 – a completely different order to what we see in places like Australia and parts of South East Asia; where Mercedes-Benz leads BMW and Audi.
Meanwhile, on a less macro scale, Lexus does extremely well in North America, yet it continues to struggle against its European rivals in other markets; meaning that, if you want something more ‘exclusive’, a Lexus is a better choice than a Mercedes-Benz in these other markets.
The Americans value luxury very differently to us, as do the Chinese, Indians, Europeans and Russians. Is it our ‘neo-colonial’ Euro-centric roots that values tradition and history over all else, or simply that our demands of a luxury car are culturally different?
It is interesting to look at a maturing market like China, where status and the idea of western luxury is highly appealing. There, the German brands do extremely well – as does Jaguar Land Rover. In fact, China is Mercedes-Benz’s largest market, yet it is still outsold by Audi.
Ford did its best to destroy those two brands (Jaguar Land Rover) in the early 2000s; and having learnt that you can’t take mainstream products with different sheet metal and rebadge and price it as luxury, they took billion-dollar losses offloading them to India’s Tata Motors which, ironically, went on to making them the proper luxury brands they always deserved to be. This is clearly reflected in their strong resurgence in recent years.
Hyundai went through a phase of being modern-premium, targeting a more mature buyer so that its sister brand Kia could take care of the younger and more mainstream customers – though the two car companies are so similarly priced these days it’s hard to see the logic in that strategy. And now, the South Koreans are launching their own luxury brand; ‘Genesis’.
Genesis is literally less than a decade old, yet it’s already outselling the likes of Audi (in some segments) in the States. In 2015 Hyundai sold 31,374 Genesis medium-sized cars in the US, compared with 22,850 Audi A6s and 44,162 BMW 5 Series.
Infiniti is Nissan’s attempt at taking on the Germans and Lexus as well. It obviously still has a long way to go; just like Lexus before it and Genesis after it, to escape the perception that it’s just an expensive Toyota or Hyundai, respectively.
Lexus has been fighting that ideological battle, but it still has nothing on the Germans. In fact, Lexus threw out almost everything with its recent rebranding campaign and came out with cars that look absolutely nothing like their predecessors, hoping to shake off the Toyota connection.
If you’re a car enthusiast, you would have seen and read over the years the number of new brands that perpetuate that they are now either premium or outright luxury.
Is Volkswagen a premium brand or a mainstream brand? What about the nearly identical, and often better, products from Skoda? What about Volvo? The Swedish brand continues to compete against the Germans on price, but is it perceived on the same level in terms of luxury?
One can simply take the sales numbers as evidence for success, which would suggest that despite Volkswagen’s recent problems, sales are still relatively solid, while Volvo is struggling against its European rivals.
But as we all know, luxury is not defined by sales success. In fact, often, the perception of luxury is about exclusivity. As Porsche’s previous CEO once said, “When I see two Porsches in the same street, I begin to worry.” Well, he must be somewhat worried these days, as Porsche sales have sky rocketed on the back of the Cayenne and Macan SUVs.
So how does a brand like Mercedes-Benz, which sells cars between the Kshs. 3 million and Kshs. 30 million ranges, manage its perception of being both luxurious and exclusive? Does the buyer of a Mercedes-AMG GT S care that a 18-year-old’s first car could also wearing the same three-pointed badge? How far can a brand stretch before losing its luxury status? Is Mercedes simply destined to forever be regarded as a luxury manufacturer without question?
Of course, there are certain things that make a Mercedes, a Mercedes. For example, did you know that every button on a Mercedes-Benz dashboard is calibrated to respond with a precise, consistent Newton force? A bit of unnecessary information but it’s true nonetheless.
The benefit of buying a cheap Mercedes-Benz, BMW or Audi is that you get a lot of parts that are shared with the significantly more expensive models. In mainstream brands, such as Mazda – which has done the best at blurring the lines between premium and luxury – the more expensive models share their parts with the lesser cars. It’s all a balancing act.
Ultimately, when you see someone driving around in a base-spec 1.0-litre Audi A1 or a Mercedes-Benz A180, they’ve chosen to pay for a luxury badge on a bare vehicle (in terms of specs and tech) over a top-spec Mazda or similar. They have chosen that luxury badge, for it means more to them than, well, luxury features. And there’s nothing truly wrong with that.
As mentioned earlier it’s more of perception, so the question remains… what makes a luxury vehicle for you?
*Opinion story courtesy of CarAdvice.