What defines a successful luxury automaker?
In the modern era, owning a personal vehicle is not an uncommon phenomenon. Cars can be relatively affordable and reliable, can give people the freedom of movement they desire, and can help open new opportunities in work, travel, and leisure lifestyles. As the auto industry has grown over the years, automakers have split themselves into varying categories, those being the economic brands we see mass quantities of on the road, luxury automakers that are not quite as prevalent, but attract a wide eye of speculators, and the ultra luxury brands that make six or seven figure priced supercars. Among these categories, the general luxury segment is among one of the most intriguing to look at.
Economic brands, such as Honda, Toyota, Nissan, Chevrolet, Ford, Hyundai, and Volkswagen (to name a few), can be seen in mass quantities due to their offerings of affordable, reliable, and safe vehicles. In many cases, individuals that need a vehicle but don’t care so much about having a posh vehicle loaded with luxury materials, tons of technology, or the most thrilling driving experience will opt for a more economic vehicle. They just want a vehicle to get them around, be safe, reliable, and a good value for their money. In many cases individuals get hooked on a brand solely for its reliability, safety, or even its styling and functionality. While many of the economic brands do offer great technology, sporty rides, and semi luxurious features, they aren’t quite up to the standards of a luxury brand.
When examining the luxury vehicle segment, the situation changes a bit. People don’t buy a luxury vehicle because they need it, they buy one because they WANT it. Everyone knows they can make due with an economy car, but getting a luxury vehicle is a choice. Luxury brands cannot be approached in the same manner as the more economic ones as they have to attract their buyers and excel in a manner of facets to keep public interest high and sales figures up. There is heavier competition within the luxury segment today than in the past and it has gone beyond the perception of just making a good car, it has to be a car you WANT to own, more so than an ordinary vehicle. In order to delve into this topic, I have gathered data from some articles and broken down luxury vehicle sales data from March of 2018 to determine trends that may help distinguish what really makes a luxury automaker successful in the modern era.
Before taking a look at data though, it is first helpful to understand how individuals look at a luxury vehicle in comparison to other vehicles on the road. By looking through a variety of sources, I found there are certain perceptions that come with owning a luxury car. Among the most important is the concept of a status symbol. Individuals feel that driving a luxury vehicle conveys they are successful in their work. In addition, many luxury vehicles are flashy in the eye of the general public. Many individuals like gaining the attention for their vehicle and having certain exclusivity, which in turn boosts self esteem and confidence. With such a way of viewing luxury vehicles, some brands have gained higher perceived value in the eye of the beholder. Brands find themselves in their own category of recognition from the general public, as what people perceive as flashy and self promoting can help distinguish which brands are more successful in certain regions of the country.
When you break it down, all luxury vehicles have their own styling, driving dynamics, and technology, but at the end of the day, they are all luxury vehicles. There are still many individuals that consider themselves “driving enthusiasts” and want such vehicles for their sportier handling and driving characteristics. In most cases though, individuals aren’t looking for a super sporty ride, they just want the looks that come from the luxury vehicle. They enjoy the added benefit of a sportier look and more enjoyable ride, but this again feeds back into the idea of “exclusivity” and implying personal “success.” Many may not realize it, but the luxury vehicle market is driven very psychologically, as success depends on how public perception is holding up. As manufacturers have seen, if you leverage the triggers that cause individuals to gravitate a certain way and think a certain way, views can shift and a new demand can arise from it.
When I took a look a vehicle sales data, it came to prove that the luxury market is quite fascinating, and perhaps the tide can change quite rapidly in terms of what the public is interested in. It is important to note first however, the data I analyzed came only from March of 2018. As it turns out, it is difficult finding the same information on vehicle sales available from every luxury automaker, so I stuck to analyzing just one month. For the purpose of this study, brands that all compete in the same segments of being “larger” luxury automakers were compared, which includes Cadillac, Lincoln, Audi, Mercedes, BMW, Lexus, Acura, and Infiniti.
When taking a look at total sales, it is easy to notice the upward trend in Crossover popularity, as most automakers sold more luxury crossovers than traditional cars. Lexus sold the most crossovers, and BMW sold the most cars. Overall, Lexus, Mercedes, and BMW had the highest sales numbers, while Cadillac, Lincoln, and Acura fell toward the bottom sellers. While this may lead to some conclusions, it doesn’t paint a clear enough picture, given that some manufacturers produce more cars and crossovers in their lineups than other brands. To make the playing field fairer for comparison purposes, I took vehicle class sales for each brand and normalized them by dividing the total sales by the number of vehicles offered in that lineup of either cars or crossovers/SUVs.
Now take a look at the normalized data. Total vehicle sales are not too far off from one another when it is broken down in this manner. It is clear to see that many automakers are within close playing fields, within 1000-3000 difference in sales, at most, in the car and crossover/SUV segments. When you scale this up to a year though, that can account for 24,000 to 36,000 more vehicles sold when comparing brands. Car sales correlate to revenue earned by manufacturers, so at the end of the day, the automaker selling the most vehicles is still the “winner.” But taking a look at this method breaks down the tide a bit, and truly shows that car sales aren’t too far off from one another after all.
We have seen time and time again, public perception can change, and quite rapidly at that. In the 50s, 60s, and 70s, owning a Cadillac was big deal, while today many may not perceive Cadillac as a brand that portrays success quite as much as say a BMW, Audi, or Mercedes. With changes in style, functionality, and technology, the playing field is quickly changing, and with new concept cars, public opinion can begin to shift. Take for example the Cadillac Escala concept.
Many individuals were intrigued with the new style of the vehicle, and many inquired for purchase, quickly to find out that it was only a concept vehicle meant to be a design study, not an actual vehicle for sale. But, as many car enthusiasts know, concepts pave the way towards new vehicle designs that automakers are working on to attract new buyers. With such, they can change their plans in order to leverage those triggers that will attracts buyers, as I mentioned earlier.
So maybe, the luxury market isn’t what many perceive it to be. Automakers are really on a level playing field, some just being a bit ahead of others in sales. As seen, the tide can change quite rapidly, and with new success in Crossover sales, the tides sure are changing. We may very well may see these sales numbers shift in the coming years, so stay tuned for the next big trend in the luxury segment. It is hard to tell right now, it could be anyone’s game to win!