‘Tier Two’ luxury brands fight to challenge with elite Germans, Lexus
Florida auto dealer Bill Wallace routinely stages special promotions at his Cadillac and Lincoln dealerships to lure BMW and Lexus owners in for a test drive — offers such as a free dinner for two or Starbucks coupons.
“We get the lowest response on those types of promotions of anything we do,” he says. “But we proceed to bang away at it.”
For Wallace and other dealers who sell luxury brands such as Cadillac, Lincoln, Acura and Infiniti, banging away is a fact of life. Attempt as they might, those second-tier brands, with the exception of surging Audi, have struggled to make inroads against the powerful triumvirate at the top: BMW, Mercedes-Benz and Lexus.
The truth for aspiring brands on the outside looking in is that the rising luxury tide is not lifting all ships identically. Luxury brand sales, up 6.Four percent in 2014, grew quicker than the mass market, but the top three brands plus Audi loved the lion’s share of the gains.
Combined, BMW, Mercedes-Benz and Lexus accounted for more than half of all U.S. luxury brand sales last year. With luxury sales projected by IHS Automotive to grow from 11.Four percent of the market last year to 12.7 percent in 2016, the stakes for aspiring brands are high.
Tho’ Acura and Infiniti sales grew in 2014, they did not keep rhythm with the luxury market as a entire, but the two Japanese brands have gotten off to a swift begin in 2015. In 2014, Cadillac eyed its share drop more than one point to 9.1 percent as its sales dropped 6.Five percent.
The big three brands love an enviable combination of advantages — deep product lineups, global reach, strong residual values and rock-solid brand pics — that aspiring brands cannot match.
Cross-shopping data display that customers of the aspiring brands are more likely to defect to one of the big three or Audi than the other way around.
Not since one thousand nine hundred ninety eight has any brand other than BMW, Mercedes and Lexus topped the U.S. luxury market in sales. That year, Lincoln led the field. Before 1998, Cadillac held an unbroken grip on the top spot going back to before 1970.
Since Mercedes grabbed the top prize in 1999, imports have predominated the playing field. Lexus ruled eleven straight years from 2000-10. These days, the top three remain locked in a bitter fight for the luxury title. BMW has taken the crown three of the last four years but is third so far this year, trailing Mercedes and Lexus.
Ambitious Lexus is breathing down the neck of Mercedes-Benz in a bid to regain the top spot it hasn’t held since 2010. Through February, Lexus sales have hopped twenty six percent, passing BMW to budge into 2nd place behind Mercedes. Like its rivals, Lexus is basing its growth on an aggressive product offensive.
“If I did not want to resecure that luxury leadership position, then my boss most likely put the wrong person in this job,” Jeff Bracken, Lexus general manager, said at the Detroit auto demonstrate. “It’s significant. No question about it.”
Mercedes has been identically bullish. “With SUV sales up twenty two percent, we expect our momentum to proceed as fresh or redesigned versions of almost all our light trucks hit the market in the next year,” Steve Cannon, CEO of Mercedes-Benz USA, said in a March three release.
In 2014, BMW topped the U.S. luxury field with an eighteen percent share, followed by Mercedes Benz with 17.Five percent and Lexus with 16.Five percent. From there, it’s a substantial drop to Audi at 9.7 percent and Cadillac with 9.1 percent. Together, the top three accounted for fifty two percent of the luxury market. No brands come near that kind of dominance in the mass market. The top three mass-market brands — Ford, Chevrolet and Toyota — accounted for 43.8 percent of nonluxury sales in 2014.
So superior are the three top luxury brands, they’re almost playing in a different segment, says Tom Libby, analyst for IHS Automotive.
When Lexus introduced its NX compact crossover in 2014, sales of the BMW X3 and Mercedes-Benz GLK declined, while sales of challenging vehicles from “striver” brands weren’t affected, he says.
“One could conclude there’s a lot going back and forward inbetween those brands,” says Libby. “When one of those brands brings out a strong entry, it does not affect the strivers. So perhaps it’s a separate market.”
Says Chris Lemley, who possesses two Massachusetts Lincoln dealerships: “If you look at sources of sales and defections, those four brands [including Audi] are cannibalizing each other for the most part.”
The top three brands love higher loyalty rates than the brands fighting to join the club: fifty eight percent of Mercedes-Benz owners who went shopping in two thousand fourteen stayed loyal to the brand, followed by BMW at fifty three percent and Lexus at fifty two percent, according to IHS data. Among other brands, only Lincoln hit the fifty percent mark.
Chris Sutton, vice president of auto retail for J.D. Power and Associates, says customers of the top three luxury brands cross shop the other two far more than they do the brands in the 2nd group, with the possible exception of Audi.
“Among customers who bought a BMW in 2014, twenty one percent visited an Audi dealer, twenty percent of them visited a Mercedes dealer and fourteen percent visited Lexus,” Sutton said. “Everything after Lexus is in single digits.”
J.D. Power and Associates
Unrelenting model attack
BMW, Mercedes-Benz and Lexus have expanded their model lineups at a rate that rivals, except Audi, have found difficult to keep rhythm with. The top three have created sub-niches where nobody imagined they existed, particularly in the SUV/crossover segments that are driving much of the growth in luxury. The BMW X4 sits astride a line inbetween a coupe and an SUV. Mercedes aims to bring fresh buyers with the GLA, a compact crossover that might have been called a station wagon in an earlier generation.
Meantime, Cadillac doesn’t have a compact luxury crossover, while BMW fields the X1, X3 and X4.
Edmunds.com counts thirty five models in BMW showrooms for two thousand fifteen including variants such as the M spectacle series. That’s up from twenty seven in 2014. Lexus and Mercedes have nineteen models each. Audi, in the midst of a product offensive aimed at joining the top tier, now offers 29.
By contrast, Cadillac has eight offerings, down from twelve last year. Infiniti has nine and Acura five.
Cadillac President Johan de Nysschen has spoken bluntly about the product gap inbetween the top group of brands and those striving to join the club.
“Something has got to be wrong when a brand as iconic as Cadillac, and part of the fabric of American culture, has one crossover and one SUV. The Germans have so many we can’t even keep track,” he said during a presentation to Wall Street analysts in November.
Indeed, Cadillac has the full-size Escalade and the midsize SRX, while BMW offers five SUV/crossover nameplates, seven when the M spectacle variants of the X5 and X6 are included.
‘Annihilating the opposition’
De Nysschen knows the formidable challenges of challenger luxury brands as well as anyone. He served as global head of Infiniti and president of Audi of America before coming to Cadillac last August. In spite of some vehicles that critics have said are as good as the Germans’, Cadillac has continued to tread water.
“Nobody who goes to work at Mercedes-Benz, BMW or Audi works on a part-time basis for those brands,” he told Automotive News last year. “They are absolutely, one hundred percent immersed in annihilating the opposition. They plan for our demise every working day of their lives.”
Without a like mentality, he said, “we cannot combat juggernaut brands like those leading German three, who got there by many, many years of consistent execution.”
De Nysschen is frank about the yawning gap inbetween Cadillac and the German stalwart brands, from sales volumes to brand photo to the breadth of the vehicle lineup. To close that gap, he’s attempting to emulate those brands — not in car design and brand identity, but in mindset. He wants Cadillac to act like it’s an sensational luxury brand, which requires tighter production and firmer pricing to avoid the all-too-frequent Cadillac fire sales that harm its resale values and picture.
Howard Drake, chairman of the Cadillac National Dealer Council, told Automotive News that dealers back de Nysschen’s efforts to turn Cadillac around.
“It’s going to take pricing discipline on our part and not overproducing on their part,” Drake said. “He’s attempting to drive margins up and position us more like a luxury brand.
“Dealers want to believe in Johan. They’re rooting for the fellow. But guys aren’t going to sit there taking double-digit hits every month indefinitely. He’s got to proceed to evolve that message and reinforce what we’re doing this for.”
Audi thrusts top Trio
De Nysschen’s former employer Audi stands a much better chance of pushing into the top three than Cadillac.
“Audi is closest to being able to transition from 2nd tier to very first tier. The rest indeed have to fight,” says Karl Brauer, analyst for Kelley Blue Book.
Audi’s sales hopped fifteen percent in two thousand fourteen as the brand passed Cadillac and Acura to budge into fourth place. Its U.S. sales lag behind its global success — it led global luxury sales for the very first two months of the year — but an aggressive product offensive could switch that. Audi’s global reach is paying off, with a broad product lineup — twenty nine vehicles for two thousand fifteen up from twenty five in two thousand fourteen — that makes it a match for its German rivals.
Acura, Infiniti and Lincoln face thicker uphill climbs. But leaders of those brands seem to understand they won’t make up the ground overnight.
Acura finished sixth in the U.S. behind Cadillac in two thousand fourteen but has leaped past Audi and Cadillac into fourth place for the very first two months of 2015, demonstrating just how hot the competition is among the aspiring brands.
Mike Accavitti, general manager of Honda’s Acura division, says Acura is comfy with its portfolio of five vehicles.
However Acura has just two SUVs — the RDX and MDX — they’re major players in two of the greatest segments: compact and midsize crossovers.
Accavitti says Acura always has been a “challenger brand” and is comfy with that status: “We zigged while competition was zagging. We established ourselves quickly as an alternative to conventional luxury brands. Across our history, we have continued to suggest that type of brand proposition.”
He pointed out that the delayed arrival of the TLX last year slowed Acura sales, which have regained momentum now that the pipeline is total.
John Connelly, chairman of the Acura National Dealer Advisory Board and president of Acura Columbus in Dublin, Ohio, said: “Acura should stay with what it’s good at, and it’s good at making reliable luxury cars that will hold their value, cars that do very well in the certified pre-owned market. Honda is not a company that looks to grow by leaps and bounds.”
Volvo, the Swedish luxury brand fighting to regain its footing after a product drought, also realizes it can’t match the German luxury giants.
“They are in a rat race. We are not going to go after them,” Volvo r&d boss Peter Mertens told reporters at the Geneva auto display earlier this month.
Lincoln’s mini surge
Lincoln, a brand on a rebuilding mission after decades languishing in the luxury hinterlands, has shown one possible avenue to gaining ground: Wage an opportunistic campaign by strategically coming in one promising segment at a time. Lincoln sales leaped sixteen percent in two thousand fourteen almost entirely based on its fresh luxury compact crossover the MKC, a fresh nameplate in a segment where Lincoln previously didn’t contest.
But Lincoln’s build up came on a low base, rising from 81,694 U.S. sales in two thousand thirteen to 94,474 vehicles in 2014, less than a third of what the luxury leaders sold.
“We have to realize we’re not the largest luxury brand,” Ford Motor Co. CEO Mark Fields told reporters at the Detroit auto demonstrate, “and we need to use that to our advantage — the personalized service that we and our dealers are delivering to our customers.”
Infiniti, which is up fourteen percent so far this year — better than Acura, Cadillac and Audi — is going through another leadership switch. De Nysschen left for Cadillac last summer after just two years.
And there was more churn in February as Nissan CEO Carlos Ghosn named Randy Parker to substitute Michael Bartsch as vice president of Infiniti Americas. In announcing the switch, Ghosn said: “Infiniti has a long history of overpromising and underdelivering.”
Larry Dominique, executive vice president for data solutions at TrueCar and a former product planning chief at Nissan, says the job of overtaking the major luxury brands will require patience: “If you look at this industry over thirty to forty years, no brand has gained transaction prices and volume swift. It takes numerous generations of product, consistency, brand management and patience. It’s harsh to have the patience.”
Wallace, the Florida Cadillac and Lincoln dealer, says challenger brands such as Cadillac and Lincoln have to get everything right.
“It’s still not as cool to drive a Cadillac as it is to drive a BMW. They’ve got to work tighter to cut through,” Wallace said. “It’s got to be a cool car with fine marketing, good styling and a fine lease suggest.
“I feel if we had more people cross shopping, we have a nice story to tell, if you could get enough people into the showrooms. But it’s a big leap getting them in.”
Mike Colias contributed to this report.
2014 share of U.S. luxury: 8.9%
Sales switch from 2013: +1.5%
Promising vehicles: Redesigned TLX, NSX
The skinny: Acura leapfrogged Cadillac and Audi to stir into 4th place among luxury brands through the very first two months of 2015. Honda’s luxury brand is working to put quality woes in the rearview mirror and get some of its shine back from the coming NSX supercar.
2014 share of U.S. luxury: 9.7%
Sales switch from 2013: +15%
Promising vehicles: Q3, revamped Q7, electrified R8
The skinny: With its global reach and an aggressive product offensive aimed directly at its German rivals, Audi stands the best chance of any of the 2nd-tier brands at challenging the leaders.
2014 share of U.S. luxury: 18%
Sales switch from 2013: +9.8%
Promising vehicles: i3, i8, X4, refreshed X6
The skinny: BMW has worn the luxury crown three of the last four years but trailed Mercedes and Lexus through the very first two months of 2015. BMW has built its leadership by populating every niche with a dizzying array of fresh vehicles. Some skeptics wonder: How many is too many?
2014 share of U.S. luxury: 9.1%
Sales switch from 2013: -6.5%
Promising vehicles: CT6 sedan
The skinny: Under fresh leadership that relocated from Detroit to Fresh York, Cadillac seeks to reboot after losing 6.5% in an overall luxury market that was up 6.4% in 2014. Fresh boss Johan de Nysschen hopes to restore Cadillac’s panache and produce a healthy dose of price discipline.
2014 share of U.S. luxury: 6.2%
Sales switch from 2013: +0.8%
Promising vehicles: Q30, QX30
Number of U.S. models: 9
The skinny: Infiniti is scrambling to find its footing after the departure of de Nysschen last year and of Michael Bartsch as vice president of Infiniti Americas, who was substituted by Randy Parker last month. Later this year, Infiniti’s U.S. dealers will begin receiving a fresh model, the compact Q30 hatchback, that will demonstrate the benefits of the brand’s globalization.
2014 share of U.S. luxury: 0.8%
Sales switch from 2013: -7%
Promising vehicles: F-Pace crossover, XE midsize sedan
The skinny: Jaguar has ambitious growth plans but at the moment is in the shadow of sister brand Land Rover. The F-Pace crossover could do for Jaguar what the Cayenne and Macan have done for Porsche.
2014 share of U.S. luxury: Two.7%
Sales switch from 2013: +Two.9%
Promising vehicles: Discovery Sport
The skinny: In the luxury world, nothing is sexier than crossovers and SUVs, and that’s all Land Rover sells. Maybe that’s why Land Rover had to spend only 1% of sticker price on incentives, in a virtual dead fever with Porsche for lowest, according to TrueCar.
2014 share of U.S. luxury: 16.5%
Sales switch from 2013: +14%
Promising vehicles: NX, RC F
The skinny: Lexus hasn’t been the luxury leader since 2010, but it overtook BMW and is running 2nd to Mercedes-Benz through the very first two months of 2015. NX was the right vehicle for the right moment.
2014 share of U.S. luxury: 5%
Sales switch from 2013: +16%
Promising vehicles: MKC, MKX, MKS
The skinny: Lincoln’s long-term comeback plan ultimately began to bite in 2014, boosted by the MKC compact crossover. With a redesigned MKX midsize crossover on the way later this year, Lincoln’s fortunes are looking up. But the fuckhole is deep, and the climb is still long.
Share of U.S. luxury in 2014: 17.5%
Sales switch from 2013: +Five.7%
Promising vehicles: GLA, C class
The skinny: Mercedes has hopped into the luxury lead through the very first two months of 2015. With the introduction of entry-level models such as the CLA and GLA, Mercedes hopes to conquest customers from mass-market brands. Coming fresh or freshened versions of crossovers and SUVs bolster prospects going forward.
U.S. share of U.S. luxury: Two.5%
Sales switch from 2013: +11%
Promising vehicles: Redesigned Panamera
The skinny: Purists didn’t think Porsche should suggest SUVs, but the Cayenne and Macan proved them wrong.
2014 share of U.S. luxury: 3%
Sales switch from 2013: -7.9%
Promising vehicles: XC90, S60L
The skinny: Volvo is stringing up its hopes on the redesigned XC90 crossover, which has received glowing early reviews. It arrives not a moment too soon for the fighting Swedish brand.
Tier two luxury brands fight to contest with elite Germans, Lexus
‘Tier Two’ luxury brands fight to rival with elite Germans, Lexus
Florida auto dealer Bill Wallace routinely stages special promotions at his Cadillac and Lincoln dealerships to lure BMW and Lexus owners in for a test drive — offers such as a free dinner for two or Starbucks coupons.
“We get the lowest response on those types of promotions of anything we do,” he says. “But we proceed to bang away at it.”
For Wallace and other dealers who sell luxury brands such as Cadillac, Lincoln, Acura and Infiniti, banging away is a fact of life. Attempt as they might, those second-tier brands, with the exception of surging Audi, have struggled to make inroads against the powerful triumvirate at the top: BMW, Mercedes-Benz and Lexus.
The truth for aspiring brands on the outside looking in is that the rising luxury tide is not lifting all ships identically. Luxury brand sales, up 6.Four percent in 2014, grew quicker than the mass market, but the top three brands plus Audi loved the lion’s share of the gains.
Combined, BMW, Mercedes-Benz and Lexus accounted for more than half of all U.S. luxury brand sales last year. With luxury sales projected by IHS Automotive to grow from 11.Four percent of the market last year to 12.7 percent in 2016, the stakes for aspiring brands are high.
However Acura and Infiniti sales grew in 2014, they did not keep tempo with the luxury market as a entire, but the two Japanese brands have gotten off to a quick begin in 2015. In 2014, Cadillac spotted its share drop more than one point to 9.1 percent as its sales dropped 6.Five percent.
The big three brands love an enviable combination of advantages — deep product lineups, global reach, strong residual values and rock-solid brand photos — that aspiring brands cannot match.
Cross-shopping data display that customers of the aspiring brands are more likely to defect to one of the big three or Audi than the other way around.
Not since one thousand nine hundred ninety eight has any brand other than BMW, Mercedes and Lexus topped the U.S. luxury market in sales. That year, Lincoln led the field. Before 1998, Cadillac held an unbroken grip on the top spot going back to before 1970.
Since Mercedes grabbed the top prize in 1999, imports have predominated the playing field. Lexus ruled eleven straight years from 2000-10. These days, the top three remain locked in a bitter fight for the luxury title. BMW has taken the crown three of the last four years but is third so far this year, trailing Mercedes and Lexus.
Ambitious Lexus is breathing down the neck of Mercedes-Benz in a bid to regain the top spot it hasn’t held since 2010. Through February, Lexus sales have leaped twenty six percent, passing BMW to stir into 2nd place behind Mercedes. Like its rivals, Lexus is basing its growth on an aggressive product offensive.
“If I did not want to resecure that luxury leadership position, then my boss very likely put the wrong person in this job,” Jeff Bracken, Lexus general manager, said at the Detroit auto showcase. “It’s significant. No question about it.”
Mercedes has been identically bullish. “With SUV sales up twenty two percent, we expect our momentum to proceed as fresh or redesigned versions of almost all our light trucks hit the market in the next year,” Steve Cannon, CEO of Mercedes-Benz USA, said in a March three release.
In 2014, BMW topped the U.S. luxury field with an eighteen percent share, followed by Mercedes Benz with 17.Five percent and Lexus with 16.Five percent. From there, it’s a substantial drop to Audi at 9.7 percent and Cadillac with 9.1 percent. Together, the top three accounted for fifty two percent of the luxury market. No brands come near that kind of dominance in the mass market. The top three mass-market brands — Ford, Chevrolet and Toyota — accounted for 43.8 percent of nonluxury sales in 2014.
So superior are the three top luxury brands, they’re almost playing in a different segment, says Tom Libby, analyst for IHS Automotive.
When Lexus introduced its NX compact crossover in 2014, sales of the BMW X3 and Mercedes-Benz GLK declined, while sales of challenging vehicles from “striver” brands weren’t affected, he says.
“One could conclude there’s a lot going back and forward inbetween those brands,” says Libby. “When one of those brands brings out a strong entry, it does not affect the strivers. So perhaps it’s a separate market.”
Says Chris Lemley, who possesses two Massachusetts Lincoln dealerships: “If you look at sources of sales and defections, those four brands [including Audi] are cannibalizing each other for the most part.”
The top three brands love higher loyalty rates than the brands fighting to join the club: fifty eight percent of Mercedes-Benz owners who went shopping in two thousand fourteen stayed loyal to the brand, followed by BMW at fifty three percent and Lexus at fifty two percent, according to IHS data. Among other brands, only Lincoln hit the fifty percent mark.
Chris Sutton, vice president of auto retail for J.D. Power and Associates, says customers of the top three luxury brands cross shop the other two far more than they do the brands in the 2nd group, with the possible exception of Audi.
“Among customers who bought a BMW in 2014, twenty one percent visited an Audi dealer, twenty percent of them visited a Mercedes dealer and fourteen percent visited Lexus,” Sutton said. “Everything after Lexus is in single digits.”
J.D. Power and Associates
Unrelenting model attack
BMW, Mercedes-Benz and Lexus have expanded their model lineups at a rate that rivals, except Audi, have found difficult to keep rhythm with. The top three have created sub-niches where nobody imagined they existed, particularly in the SUV/crossover segments that are driving much of the growth in luxury. The BMW X4 sits astride a line inbetween a coupe and an SUV. Mercedes aims to bring fresh buyers with the GLA, a compact crossover that might have been called a station wagon in an earlier generation.
Meantime, Cadillac doesn’t have a compact luxury crossover, while BMW fields the X1, X3 and X4.
Edmunds.com counts thirty five models in BMW showrooms for two thousand fifteen including variants such as the M spectacle series. That’s up from twenty seven in 2014. Lexus and Mercedes have nineteen models each. Audi, in the midst of a product offensive aimed at joining the top tier, now offers 29.
By contrast, Cadillac has eight offerings, down from twelve last year. Infiniti has nine and Acura five.
Cadillac President Johan de Nysschen has spoken bluntly about the product gap inbetween the top group of brands and those striving to join the club.
“Something has got to be wrong when a brand as iconic as Cadillac, and part of the fabric of American culture, has one crossover and one SUV. The Germans have so many we can’t even keep track,” he said during a presentation to Wall Street analysts in November.
Indeed, Cadillac has the full-size Escalade and the midsize SRX, while BMW offers five SUV/crossover nameplates, seven when the M spectacle variants of the X5 and X6 are included.
‘Annihilating the opposition’
De Nysschen knows the formidable challenges of challenger luxury brands as well as anyone. He served as global head of Infiniti and president of Audi of America before coming to Cadillac last August. In spite of some vehicles that critics have said are as good as the Germans’, Cadillac has continued to tread water.
“Nobody who goes to work at Mercedes-Benz, BMW or Audi works on a part-time basis for those brands,” he told Automotive News last year. “They are absolutely, one hundred percent immersed in annihilating the opposition. They plan for our demise every working day of their lives.”
Without a like mentality, he said, “we cannot combat juggernaut brands like those leading German three, who got there by many, many years of consistent execution.”
De Nysschen is frank about the yawning gap inbetween Cadillac and the German stalwart brands, from sales volumes to brand picture to the breadth of the vehicle lineup. To close that gap, he’s attempting to emulate those brands — not in car design and brand identity, but in mindset. He wants Cadillac to act like it’s an off the hook luxury brand, which requires tighter production and firmer pricing to avoid the all-too-frequent Cadillac fire sales that harm its resale values and pic.
Howard Drake, chairman of the Cadillac National Dealer Council, told Automotive News that dealers back de Nysschen’s efforts to turn Cadillac around.
“It’s going to take pricing discipline on our part and not overproducing on their part,” Drake said. “He’s attempting to drive margins up and position us more like a luxury brand.
“Dealers want to believe in Johan. They’re rooting for the stud. But guys aren’t going to sit there taking double-digit hits every month indefinitely. He’s got to proceed to evolve that message and reinforce what we’re doing this for.”
Audi shoves top Trio
De Nysschen’s former employer Audi stands a much better chance of pushing into the top three than Cadillac.
“Audi is closest to being able to transition from 2nd tier to very first tier. The rest truly have to fight,” says Karl Brauer, analyst for Kelley Blue Book.
Audi’s sales leaped fifteen percent in two thousand fourteen as the brand passed Cadillac and Acura to budge into fourth place. Its U.S. sales lag behind its global success — it led global luxury sales for the very first two months of the year — but an aggressive product offensive could switch that. Audi’s global reach is paying off, with a broad product lineup — twenty nine vehicles for two thousand fifteen up from twenty five in two thousand fourteen — that makes it a match for its German rivals.
Acura, Infiniti and Lincoln face thicker uphill climbs. But leaders of those brands seem to understand they won’t make up the ground overnight.
Acura finished sixth in the U.S. behind Cadillac in two thousand fourteen but has leaped past Audi and Cadillac into fourth place for the very first two months of 2015, demonstrating just how hot the competition is among the aspiring brands.
Mike Accavitti, general manager of Honda’s Acura division, says Acura is comfy with its portfolio of five vehicles.
However Acura has just two SUVs — the RDX and MDX — they’re major players in two of the greatest segments: compact and midsize crossovers.
Accavitti says Acura always has been a “challenger brand” and is convenient with that status: “We zigged while competition was zagging. We established ourselves quickly as an alternative to conventional luxury brands. Via our history, we have continued to suggest that type of brand proposition.”
He pointed out that the delayed arrival of the TLX last year slowed Acura sales, which have regained momentum now that the pipeline is utter.
John Connelly, chairman of the Acura National Dealer Advisory Board and president of Acura Columbus in Dublin, Ohio, said: “Acura should stay with what it’s good at, and it’s good at making reliable luxury cars that will hold their value, cars that do very well in the certified pre-owned market. Honda is not a company that looks to grow by leaps and bounds.”
Volvo, the Swedish luxury brand fighting to regain its footing after a product drought, also realizes it can’t match the German luxury giants.
“They are in a rat race. We are not going to go after them,” Volvo r&d boss Peter Mertens told reporters at the Geneva auto display earlier this month.
Lincoln’s mini surge
Lincoln, a brand on a rebuilding mission after decades languishing in the luxury hinterlands, has shown one possible avenue to gaining ground: Wage an opportunistic campaign by strategically injecting one promising segment at a time. Lincoln sales leaped sixteen percent in two thousand fourteen almost entirely based on its fresh luxury compact crossover the MKC, a fresh nameplate in a segment where Lincoln previously didn’t contest.
But Lincoln’s build up came on a low base, rising from 81,694 U.S. sales in two thousand thirteen to 94,474 vehicles in 2014, less than a third of what the luxury leaders sold.
“We have to realize we’re not the largest luxury brand,” Ford Motor Co. CEO Mark Fields told reporters at the Detroit auto showcase, “and we need to use that to our advantage — the personalized service that we and our dealers are delivering to our customers.”
Infiniti, which is up fourteen percent so far this year — better than Acura, Cadillac and Audi — is going through another leadership switch. De Nysschen left for Cadillac last summer after just two years.
And there was more churn in February as Nissan CEO Carlos Ghosn named Randy Parker to substitute Michael Bartsch as vice president of Infiniti Americas. In announcing the switch, Ghosn said: “Infiniti has a long history of overpromising and underdelivering.”
Larry Dominique, executive vice president for data solutions at TrueCar and a former product planning chief at Nissan, says the job of overtaking the major luxury brands will require patience: “If you look at this industry over thirty to forty years, no brand has gained transaction prices and volume prompt. It takes numerous generations of product, consistency, brand management and patience. It’s rough to have the patience.”
Wallace, the Florida Cadillac and Lincoln dealer, says challenger brands such as Cadillac and Lincoln have to get everything right.
“It’s still not as cool to drive a Cadillac as it is to drive a BMW. They’ve got to work stiffer to cut through,” Wallace said. “It’s got to be a cool car with excellent marketing, excellent styling and a fine lease suggest.
“I feel if we had more people cross shopping, we have a nice story to tell, if you could get enough people into the showrooms. But it’s a big leap getting them in.”
Mike Colias contributed to this report.
2014 share of U.S. luxury: 8.9%
Sales switch from 2013: +1.5%
Promising vehicles: Redesigned TLX, NSX
The skinny: Acura leapfrogged Cadillac and Audi to budge into 4th place among luxury brands through the very first two months of 2015. Honda’s luxury brand is working to put quality woes in the rearview mirror and get some of its shine back from the coming NSX supercar.
2014 share of U.S. luxury: 9.7%
Sales switch from 2013: +15%
Promising vehicles: Q3, revamped Q7, electrified R8
The skinny: With its global reach and an aggressive product offensive aimed directly at its German rivals, Audi stands the best chance of any of the 2nd-tier brands at challenging the leaders.
2014 share of U.S. luxury: 18%
Sales switch from 2013: +9.8%
Promising vehicles: i3, i8, X4, refreshed X6
The skinny: BMW has worn the luxury crown three of the last four years but trailed Mercedes and Lexus through the very first two months of 2015. BMW has built its leadership by populating every niche with a dizzying array of fresh vehicles. Some skeptics wonder: How many is too many?
2014 share of U.S. luxury: 9.1%
Sales switch from 2013: -6.5%
Promising vehicles: CT6 sedan
The skinny: Under fresh leadership that relocated from Detroit to Fresh York, Cadillac seeks to reboot after losing 6.5% in an overall luxury market that was up 6.4% in 2014. Fresh boss Johan de Nysschen hopes to restore Cadillac’s panache and produce a healthy dose of price discipline.
2014 share of U.S. luxury: 6.2%
Sales switch from 2013: +0.8%
Promising vehicles: Q30, QX30
Number of U.S. models: 9
The skinny: Infiniti is scrambling to find its footing after the departure of de Nysschen last year and of Michael Bartsch as vice president of Infiniti Americas, who was substituted by Randy Parker last month. Later this year, Infiniti’s U.S. dealers will begin receiving a fresh model, the compact Q30 hatchback, that will demonstrate the benefits of the brand’s globalization.
2014 share of U.S. luxury: 0.8%
Sales switch from 2013: -7%
Promising vehicles: F-Pace crossover, XE midsize sedan
The skinny: Jaguar has ambitious growth plans but at the moment is in the shadow of sister brand Land Rover. The F-Pace crossover could do for Jaguar what the Cayenne and Macan have done for Porsche.
2014 share of U.S. luxury: Two.7%
Sales switch from 2013: +Two.9%
Promising vehicles: Discovery Sport
The skinny: In the luxury world, nothing is sexier than crossovers and SUVs, and that’s all Land Rover sells. Maybe that’s why Land Rover had to spend only 1% of sticker price on incentives, in a virtual dead warmth with Porsche for lowest, according to TrueCar.
2014 share of U.S. luxury: 16.5%
Sales switch from 2013: +14%
Promising vehicles: NX, RC F
The skinny: Lexus hasn’t been the luxury leader since 2010, but it overtook BMW and is running 2nd to Mercedes-Benz through the very first two months of 2015. NX was the right vehicle for the right moment.
2014 share of U.S. luxury: 5%
Sales switch from 2013: +16%
Promising vehicles: MKC, MKX, MKS
The skinny: Lincoln’s long-term comeback plan eventually began to bite in 2014, boosted by the MKC compact crossover. With a redesigned MKX midsize crossover on the way later this year, Lincoln’s fortunes are looking up. But the slot is deep, and the climb is still long.
Share of U.S. luxury in 2014: 17.5%
Sales switch from 2013: +Five.7%
Promising vehicles: GLA, C class
The skinny: Mercedes has leaped into the luxury lead through the very first two months of 2015. With the introduction of entry-level models such as the CLA and GLA, Mercedes hopes to conquest customers from mass-market brands. Coming fresh or freshened versions of crossovers and SUVs bolster prospects going forward.
U.S. share of U.S. luxury: Two.5%
Sales switch from 2013: +11%
Promising vehicles: Redesigned Panamera
The skinny: Purists didn’t think Porsche should suggest SUVs, but the Cayenne and Macan proved them wrong.
2014 share of U.S. luxury: 3%
Sales switch from 2013: -7.9%
Promising vehicles: XC90, S60L
The skinny: Volvo is dangling its hopes on the redesigned XC90 crossover, which has received glowing early reviews. It arrives not a moment too soon for the fighting Swedish brand.