Acura TSX, BMW
3-series, Cadillac CTS. Excellent cars? Yes.
Luxury cars? Hardly.
I've taken the time to contemplate the subject of
luxury manufacturers recently. More
specifically, I have been considering the
ultimate value of the entry-level “luxury car”.
Two very different cars started my mind’s wheels
turning. One was a result of a brief
conversation I had about the value of the
Cayenne to Porsche. I must confess that I have
never been very excited about the Cayenne. This
is probably due to my stick-in-the mud thinking
that an SUV should be rugged and designed for
off-road use or for towing or both: I’m thinking
Chevy Suburban and Jeep Wrangler. What the
Cayenne has done is bring new buyers into the
fold (and quite a lot of them) due to the size
of the segment in which the Cayenne competes.
Many would argue that this vehicle has helped
keep Porsche afloat. I must agree with this.
However, what concerns me is that the Porsche
brand has ultimately been watered down. If there
is a Porsche on every block, then the appeal of
owning some of the more exotic models is
diminished. Am I actually saying that selling
more cars is bad for a company? If it means
selling them under the nameplate of a premium
brand, then yes. Though the Cayenne is hardly
entry level, it could be considered so by normal
Porsche standards.
The other car that has made me question the
benefit of entry-level luxury cars was spurred
on by my search for a 'new' tow vehicle. The
Cadillac Fleetwood is the only car built in the
last 20 years that has a 7000-pound towing
capacity. I have surfed through eBay and the
classifieds and I am struck at what a
pretentiously elegant car the Fleetwood is. Yes,
it has a Chevy V8 under the hood and had
questionable build quality by today's standards.
But what makes this car stand out in my mind is
that you didn't see a whole lot of them on the
road, and when you did, you knew the owner had
money. Cadillacs were expensive and relatively
limited in volume even through the 1990s, the
Cimarron notwithstanding. The Cadillac lineup
used to be filled with cars like the Fleetwood -
remember the Eldorado convertibles from the
1970s, or the sedans from the '60s with stacked
headlamps and decklids that emphasized the car's
length? Not everyone could afford a Cadillac and
the styling made sure that you knew this was an
exclusive car. Today we have some very excellent
and competitive Cadillacs in all sorts of price
ranges. Think about it, we have the CTS, the SRX,
the STS, the DTS, the XLR and lest we forget
some very derivative Escalades that share nearly
as many exterior body panels with their Chevy
and GMC counterparts as the much lamented
Cimmaron shared with the Cavalier and Sunbird. I
can't help but wonder if some of this isn't
hurting the Cadillac brand image. And the
Escalade is the least of my concerns because of
its sky-high price.
What concerns me is the success of the CTS and SRX.
They are all over the place. These are great
cars, but I fear that so many of them on the
road are making Cadillacs so common that we are
losing reverence for the make. It seems to me as
if history is repeating itself. Back in the
years leading up to, and then after, World War
II many of the luxury carmakers struggled to
find a way to stay in business by selling luxury
cars in a market where demand was drying up.
Auburn-Cord-Duesenberg made the mistake of
selling three luxury brands during and after the
depression. All their eggs were in the same
proverbial basket. Packard anticipated the
downturn in premium priced cars by offering an
entry-level luxury car called the Packard
Clipper. The car sold well—but too well. As most
automotive historians agree, the Clipper
essentially won the battle but was one of the
major factors in losing the war. Selling the
Clipper made the rest of the Packard line less
exclusive. Packard could have taken a lesson
from its contemporary rival, Cadillac. From 1927
to 1940 Cadillac sold a companion make called
the LaSalle. This allowed Cadillac dealers to
sell to a lower price bracket while keeping the
premium cars truly premium. When the depression
subsided Cadillac dumped the LaSalle and largely
kept its cars out of Buick's price territory.
Conversely, Packard never recovered from the
tarnished image the Clipper produced, and by
1959 was gone from the market entirely.
But the market has changed. Younger buyers want their
premium cars right now. They want their premium
cars to come in all shapes and sizes. They want
their premium brands selling further and further
down market. Cadillac must sell the CTS in order
to keep pace with the “luxury” cars from Acura,
Lexus, Infiniti, BMW and even Mercedes Benz. Is
this what we really want? Does a Lexus LS seem
that exclusive to anyone other than a car
enthusiast? Does an S-Class really look more
expensive than a C-class? And does the general
public even know that an Acura TSX is supposed
to be a different car than an Accord? The Lexus
RX has been the best selling luxury car for the
past few years—something that competes in an
overlapping price range with a Ford Explorer.
Problem is, Chevy sells more vehicles priced
over $40,000 than any other manufacturer. Buying
a Lexus or Cadillac no longer puts one in an
exclusive brand, and this price range is no
longer exclusive to premium nameplates.
Now we are seeing some of the luxury carmakers trying
to figure out how to keep their image exclusive.
Mercedes made a less than successful attempt to
bring in a separate top-end brand with Maybach.
Cadillac is toying with the idea of a V12 sedan
to compete in even higher price segments. The
question remains whether this will work.
Cadillac used to draw buyers due to the
exclusive nature of the brand. Will a V12
Cadillac buyer feel they have an exclusive
product when tens of thousands of CTSs are
roaming the streets? Does an S-class buyer want
the same name on the decklid as someone who
spent half as much money on a C-class? Probably
not. BMW has the same problems. I used to be
impressed when I saw a BMW because they were
somewhat scarce and they were definitely
expensive. Now you see the 3-series everywhere.
Yes, this is a result of BMW building an
excellent car, but it is perhaps too accessible.
I believe Acura is slowly realizing why it has less of
a premium reputation. Just look at its
entry-level cars. It sold the Integra, which was
heavily based on the Civic. While the Integra
had quite a following, it was never viewed as a
luxury car. Can you imagine if Cadillac sold a
car as competent as the Integra in that market?
Critics would say that they had sold out, gone
downscale, despite the goodness of the product.
Now that the Integra’s replacement, the RSX is
gone, perhaps this luxury brand will finally
begin to be exclusive—though the re-branded
European Accord-based TSX isn’t helping either,
as good of a car as it is. Of course, dumping
the Legend and Integra names hasn’t helped
either, but that’s another issue for another
day.
Another car that bothers me is the Jaguar X-Type. I
remember the early TV spots for this car. They
were essentially bringing attention to the fact
that Jaguars were now accessible to everyone;
basically claiming that now everyone could have
an exclusive car. Excuse me, but doesn’t that
defy the whole definition of exclusivity?
Really, there is no luxury manufacturer exempt
from this trend. Acura has the TSX, BMW has the
3-series (and soon the 1-series), Cadillac the
CTS, SAAB the 9-3, Volvo the C30 and S40, Jaguar
the S-Type, Lincoln the Zephyr (aka MKZ),
Mercedes the C-class, Lexus the ES and IS, and
Infiniti the G35 (thank goodness the G20 is
gone…).
So what is a manufacturer to do? How far downscale
should a luxury brand go? GM once had a simple
and effective solution for this problem. Create
brands for each price category. It gave
customers something to move up into—from
Chevrolet, to Pontiac, to Oldsmobile, to Buick,
to Cadillac. There was no need for an
entry-level luxury car at Cadillac because that
was what Buick was selling. Sadly, our culture
has changed. Young people are unwilling to wait
until they are 50 or retired to buy the
Cadillac. They want it now. I would argue that
the manufacturers are not to blame for this—we,
as consumers, are.
How long will Cadillac and Lexus and Porsche be viewed
as exclusive or premium? Will they eventually
create upper brands in order to find a new level
of exclusiveness once the current brands are
pushed too far down market? That's one answer.
The other is that the consumer could settle for
a Buick or Toyota badge and wait for the gray
hair to come in before indulging in a Cadillac
or Lexus. Of course, Buick and Toyota would have
to be offering something like the CTS and IS for
this to work and it would force BMW to offer a
companion brand other than Mini (seems to me
they had bought Rover for this exact purpose but
bailed out of the project before we saw this
come to fruition). Unfortunately, it seems
unlikely that the culture would embrace this
even if the product lines shifted accordingly.
And with that, our beloved luxury brands will no
longer represent what we ultimately want them
to.
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