'Splurge' spending gone for carmakers

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Luxury vehicle buyers will have more models to choose from in 2002.

Automakers are readying a slew of new or redesigned cars and trucks to reach baby boomers in their peak earning years and younger, upwardly mobile buyers. Several carmakers, including General Motors Corp.'s Cadillac and Ford Motor Co.'s Lincoln, have dual-product strategies to keep older buyers while they reposition themselves as hipper with new vehicles for younger, affluent motorists.

The upper end of the luxe segment is showing more weakness than the lower end, says Susan Jacobs, president of auto consultancy Jacobs & Associates. Wealthy individuals are buying what they want when they want. But, she adds, gone are the "splurge" buyers who felt flush during the stock market's go-go years and fueled luxe vehicle sales until stocks tanked.

Newer lower-end models in the segment have tended to sell well, Ms. Jacobs says. But marketers with new entry-level cars this year, including Cadillac with its CTS sedan and Nissan North America with the Infiniti G35 sports sedan, will have to decide whether they can live with smaller sales volumes in 2002 or move to incentives. She says both marques have been trying to move away from incentives to build their brand images.

upscale trucks get hotter

Unit sales in the overall luxe sedan segment will shrink 2.3% this year, with upscale trucks gaining up to 6%, predicts auto consultancy CNW Marketing/Research.

Art Spinella, a VP at CNW, warns that upscale carmakers aiming for younger buyers with entry-level vehicles could hurt their top-drawer, exclusive brand images, including Ford's Jaguar Cars North America and DaimlerChrysler's Mercedes-Benz USA. Both marketers have added entry-level models in recent years to woo younger buyers and increase vehicle sales.

CNW's annual surveys ask new-vehicle intenders what they eventually would like to own-the vehicle they really want but perhaps can't afford now.

Mercedes was still the most aspirational luxe brand in the 2001 survey, with a 9.2 score out of a possible 10. But Mercedes' score has hovered in that range since 1990, Mr. Spinella notes. Meantime, Lexus has risen from 6.5 in 1990 to 6.7 in 1995 and 7.7 last year.

Toyota Motor Sales USA's Lexus was the best-selling U.S. luxury car brand last year-it's second consecutive crown as it sold 223,983 vehicles in 2001.

BMW of North America also has made gains as an aspirational brand. BMW rose from 6.1 in 1990 to 7.8 in 1995 but slipped to 7.6 last year, CNW reports.

BMW took a poetic approach in launch ads during the Olympics, via Publicis Groupe's Fallon, Minneapolis, for its redone, top-of-the-line 7 Series sedan.

Even Cadillac is more aspirational. The brand's 4.1 score in 1990 fell to 3.6 in 1995 but jumped to 6.3 last year. Mr. Spinella says Cadillac's scores have improved with the `99 arrival of the Escalade SUV.

Mark LaNeve, general marketing manager at Cadillac, says new models with bold, new styling return the marque to "our brand essence, our DNA. Cadillac is going to enter key growth segments with must-have products for the very first time."

Ford's Lincoln Mercury Co. has a big year planned. Lincoln will launch the second-generation Navigator SUV and redone 2003 Town Car sedan in May; the new midsize Aviator SUV, aimed at younger drivers, this summer; and the 2003 LS sedan this fall. All will use the new tag, "Travel well with Lincoln." WPP Group's Y&R Co., Irvine, Calif., handles.

Lincoln says 60% of Navigator buyers are new to the Lincoln brand, as are 70% for the LS. "Our near-term strategy is set: Invest in the Town Car to retain our loyal customers, refine the Navigator and LS to sustain our new customers, and nourish the brand with new products such as the Aviator," says Richard Beattie, VP-marketing, sales and service at Lincoln Mercury.

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