U.S. firms bid to retake luxury car market

U.S. luxury cars manufacturers like Cadillac and Lincoln, respectively run by GM and Ford, are struggling to win back a share of the expanding luxury car market, largely controlled by Japanese and German automakers.

These brands, which once embodied the very essence of luxury cars, saw quality decline in the years before the industry crisis, and drivers abandoned them in their droves.

Now they must recover their former glory by improving entry-level models, which was not their strong suit, but which represented the fastest-growing luxury market last year.

“The appetite for smaller luxury cars is relatively new in this country,” David Cole, director of the Center for Automotive Research, told AFP. “It was part of the industry for a while in the other countries.”

On Sunday, the eve of the opening of the Detroit Auto Show, Cadillac unveiled its new sedan, ATS 2013.

The compact, which is similar to the BMW 3 Series, Mercedes C Class and Audi A4, is “intended to challenge the world’s best premium cars,” its creators told reporters.

Lincoln, for its part, was set to unveil on Tuesday a new “concept car,” MKZ, with which its builders are trying to define a new strategy and recover sales.

“The problem we had at Cadillac is that we couldn’t invest in a complete line up,” acknowledged Mark Reuss, president of General Motors North America.

“Now we are going go head to head with the competition and we are going to win,” he told a group of reporters after a press conference.

The challenge is huge. BMW and Mercedes-Benz have secured for themselves the top two positions in the high-end U.S. car market.

BMW sales rose 12.6 percent in 2011 to 247,907 cars, surpassing Mercedes just by a whisker, whose sales rose 13.3 percent to 245,231 vehicles.

“In 2011 the BMW Group sold more premium vehicles worldwide than any other manufacturer,” said Ludwig Willisch, director of BMW North America.

Lexus, a Toyota brand, which was number one in the United States for 11 years, fell to third place, with a decline in sales from 13 percent to 198,552 units due to serious logistical problems caused by last year’s tsunami in Japan and floods in Thailand.

Cadillac and Lincoln lag far behind: the first sold 152,389 cars last year, up 3.7 percent, while the sales of Lincoln fell by 0.2 percent to 85,643 cars.

Both brands have younger customers. “I think it’s very important,” said GM’s Reuss.

“People do spend more on cars at a younger age,” industry analyst Cole agreed.

And these young drivers start off by buying smaller cars.

“Before luxury was associated only with larger vehicles,” Cole explained. “Now it’s about feature content, the quality of the interior, sophisticated leather. There’s a broader definition of luxury than before.”

Ludwig Willisch insisted that “a different customer” was now driving the premium car market.

“Customers are more complicated and have changed in post-recession years,” he said. “Although their portfolios may have taken a hit, price has not become the key factor in their purchase decision.” 

(AFP)