Sunday, November 24, 2013

Editorial: Luxury car makers could be even better

Luxury is a very subjective term these days. It gets bandied about with near reckless abandon, applied to everything from pet supplies to apartment rentals to fancy cars. When it comes to cars, the mainstream manufacturers are moving ever increasingly upmarket, adding features that were traditionally the distinct purview of luxury car makers, blurring the lines ever more. In fact, companies such as Hyundai have taken the entire market and turned it one its head, offering the Hyundai Equus, a V8-powered RWD long-wheelbase luxury sedan with features that were once only found on chauffeur-driven cars such as Rolls Royces or the upper end of the Mercedes S-class range. So with the definition of a luxury car becoming increasingly unclear, what are some things that luxury manufacturers can do to differentiate themselves from the riff-raff and justify the extra expense?

Here are a few ideas that I believe luxury manufacturers must do in order to maintain their standing and brand equity in the luxury marketplace and keep themselves from being overtaken by the invasion of mainstream manufacturers into their space.

1. Create a low pressure dealership experience with truly knowledgeable personnel

One of the things I personally hate the most about walking into the dealerships of of luxury brands is the high-pressure sales tactics that their salespeople use to try to force through a purchase, even when it is clear that I am not ready to buy. In addition to making a potential buyer feel unwelcome, the tactics also tend to expose the holes in the salesperson's knowledge of the product because they try to make everything fit the buyer's demands, often at the expense of reality. Instead, many luxury manufacturers can learn a thing from Tesla Motors, which uses a very low-pressure environment and gives buyers an opportunity to extensively explore the vehicle with a truly knowledgeable associate who not only understands the product, but also the marketplace, business environment, and competition. This altogether more pleasant experience creates goodwill between a potential buyer and the brand, increasing the probability that a buyer will return when they are ready to buy. While I realize that the franchised dealer networks will never agree to this since they are more interested in stealing business from each other than fostering long-term relationships with owners.

2. Make the test drive experience more thorough and more like real life ownership

All too often, I find myself dealing with dealerships who believe that a short 10-minute test-drive is all it takes to convince a buyer that this is the right car for them to own for years to come. Sadly, this is, at best, misguided and, at worst, detrimental to the long-term brand loyalty they hope to engender in a buyer. Instead, with the higher margins present on most luxury cars, manufacturers can do themselves tremendous favors by finding ways to offer overnight test drives to serious buyers. Allow a buyer to put a deposit down on a car to take a loaner of the model they are buying home overnight. This allows them to live with the car for a bit and really appreciate the ownership experience. Too much liability or too much effort to maintain a fleet of loaners? In some of the larger cities, fractional ownership clubs or membership based luxury car rental agencies exist that manufacturers can partner with to create a loaner program that allows truly interested buyers a chance to spend even more extended periods with the car, truly allowing them to experience the joy of ownership before they buy.

3. Change the service experience

Hyundai is one of the first brands to truly step up in this area, but other manufacturers should follow suit. With Hyundai, the owners of the Equus never have to set foot inside a Hyundai dealer in order to have their car serviced because the dealer will show up to the owners home or office to collect the vehicle and leave a loaner in its place. This sort of concierge style service truly exemplifies the convenience that luxury manufacturers need to provide. In a similar manner, Tesla Motors, for a nominal fee, will pick up an owner's car and deliver it to the nearest service station for service, or in some cases, even be able to service the vehicle on-site wherever it is located. This kind of on-demand servicing and convenience exemplifies the extra mile that luxury manufacturers will need to go to in order to continue to differentiate themselves from their more mainstream competition, which have in many cases already reached parity with the luxury brands in terms of what the offer while owners are waiting on service. Going the extra mile to offer that extra bit of special attention will help not only make owners feel special, but help to tighten that owner loyalty to the brand.

4. Offer real choices in equipment

This is one of my pet peeves about walking into dealerships. All too often, they are so focused on pushing on me a car that they have in inventory that, as a buyer, I feel somewhat limited by their selection, especially in a location like New England where many dealerships only stock AWD versions of certain models. Instead, a truly luxury experience would be to work closely with the buyer to offer an almost bespoke experience to help them create the exact car that they want and help them to order it. Some manufacturers already do this to an extent, with BMW offering buyers opportunities to tailor the cars to their exact specs in exchange for waiting up to 2 months for it to be completed and shipped, but more luxury brands need to do this. The experience gives owners a chance to really get precisely the car they want, which is what that true luxury experience should be. Best of all, many buyers are willing to pay just a little bit more for a car that exactly meets their needs as opposed to that in-stock model that only kind-of-sort-of satisfies almost a majority of their desires.

None of these ideas is truly new to the industry, but no single manufacturer implements all of them to offer a luxury car buying experience that I believe will build greater brand loyalty. Individual dealerships sometimes implement individual measures in a short-term manner to limited effect, but I see merit in a manufacturer pursuing these strategies to grow their market share and give people a whole new car buying experience. Of course, at the current rate of advancement, it is entirely possible that a mainstream manufacturer could beat them all to it and steal their way into the luxury car makers' ranks.

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