Lincoln and Cadillac struggle to get luxury groove back
Luxury carmakers should be smiling.
The resurgent US market, China’s booming wealth sector and other rising large economies, are delivering strong sales to the likes of BMW, Mercedes Benz and Bentley.
But not venerable American brands like Ford’s Lincoln and General Motors’ Cadillac.
It’s been decades since the two US models set standards for excellence and comfort, ferrying kings, presidents and Hollywood stars -- and both know it.
The market for luxury cars has soared around the world, with the Germans breaking new sales records despite the recession-shrunk European market. Double-digit growth in China underpinned that.
Yet Lincoln and Cadillac struggle to keep sales from falling.
Neither has the respect and desirability they need among under-50 buyers in many markets, including the United States, where BMW and Audi are chopping into the demand of the moneyed younger generation.
Last year, Mercedes sold 295,000 cars in the US, BMW 281,000, and Audi 139,000, all up one to two per cent.
Meanwhile Cadillac sales fell two per cent to 150,000 units and Lincoln lost four per cent to 82,000.
Both brands suffered deeply in the US financial crisis, when their parents General Motors and Ford fought just to allow their core business to survive.
That set the luxury lines back several years against competitors, at a time when the markets in large rising economies like China and Brazil started to take off.
But their revivals remain stifled.
Despite the great technology and power in their vehicles, as well as hand-stitched leather seats and other hallmarks of opulence, Lincoln and Cadillac are also-rans in global market terms.
“Right now you have to actually convince people there are American luxury cars,” said Jeremy Anwyl of auto industry specialist Edmunds.com.
Putting out US$50,000 for a Cadillac or Lincoln does not readily explain itself to onlookers or neighbours.
“With a Mercedes you don’t need a translator to explain why you’ve bought that vehicle,” Anwyl said.
General Motors chief Mark Reuss admits the challenge is deep. “It’s going to take a long time... we’re going to do it piece by piece.”
But in some ways, the canvas is wide open, Cadillac and Lincoln having never made it onto the same wavelength as younger buyers.
“In many places people don’t even know Cadillac, so it is a fun job,” Reuss told AFP. “You don’t have to undo what’s been done.”
Cadillac staked its future last year on the ATS, its four-door sedan that runs in the US$33,000-US$55,000 price range.
The elegant redesign won awards, including the North American Car of the Year at the Detroit auto show this week.
On Tuesday, Cadillac introduced its electric hybrid ELR, with more sport lines and a 300-mile (480-kilometre) range on its battery alone.
The maker’s line, though, is still not as full as its German competitors, and lacks the stunning high-end sports cars that can lure entry-level buyers to their brand.
Lincoln is the same: its line is not as broad, and its identity as a premium brand is weak.
Ford though is now boosting spending on the brand, launching the sporty MKZ sedan last year.
At Detroit this week, it introduced a concept crossover, the MKC, to broaden its line and take on Mercedes’ GLK350 and the Audi Q5.
“The only way to be successful in this business is to be authentic,” said Ron Heiser, chief engineer at Lincoln.
“Our vision is quite different than the Germans, more human-designed, more soft and warm, and more inviting and a bit whimsical.”
Lincoln also aims to offer to a wider market at a lower price the customization that hugely swells the cost of an Audi or BMW.
“There is more choice about the flavour of the vehicle,” Heiser said, adding that this will attract the Chinese buyer.
Even so, said Anwyl, both Lincoln and Cadillac are still competing only in the “near luxury segment.”
For Anwyl, real luxury is pushing the US$100,000 a car level, with Mercedes selling its top-line car at around US$200,000 and Bentley, which sold 8,500 vehicles last year -- 60 per cent in the US and China -- starting at US$200,000.
Reuss said the market battle is focused on craftsmanship, and that luxury will be “heavily design-oriented.”
“At end of the day, it is a reflection of who you are.”
In those terms, the Americans know that, for the moment, everyone sees themselves as German.