Wednesday, May 26, 2010

Are volume car brands slowly killing luxury brands?

In a materialistic society, the above title sounds ludicrous, right? Maybe. However, there is reason to wonder. Why? Consider these factors...

  • The intense competition in the midsize sedan segment in the United States is going to produce some amazing cars in the future. In fact, the future is sort of here today. The 2010 Ford Fusion, 2011 Kia Optima and the 2011 Hyundai Sonata are segment busters.  These cars have luxury-like features at (relatively) affordable prices.  I sat in a Sonata and thought the interior was superior to my dad's 2007 Cadillac DTS.
    • This is only the beginning. The 2012 Chevy Malibu is supposed to be another segment-busting vehicle. One automotive writer was allegedly brought to tears when he saw it up close because he "never thought he'd see the day that GM would make a proper volume car again." I've also heard the 2013 Ford Fusion is going to "make the current Fusion look like a piece of junk in comparison and set the bar so high than no one will be able to match it." Considering the current Fusion is an excellent vehicle, I can only imagine what's in store for the next Fusion.
  • The full-size 2010 Ford Taurus is a preview of this. Yes, the Taurus is a tad on the expensive side, but the feature list of the car is mind-blowing for a volume brand. Blind-spot information systems, backup sensors and cameras, rain sensing wipers and more? You don't see some of these features in certain luxury brands! Ford threw the kitchen sink at the Taurus, so much so that its feature set rivals its luxury sibling, the Lincoln MKS to the point where the differences are small, such as better quality leather, a better stereo and more sound deadening material.
  • This competition is going to find its way into the compact segment as well. The 2011 Chevrolet Cruze is a car I've written puh-lenty about. It feature set, MPG and ride quality exceeds any car in its class and I'm VERY excited to test drive it and see how it compares to other cars on my shopping list.  I'm anxiously awaiting for this car to get here and wish I could take a Saturday field trip to the Lordstown plant to watch it be built because the YouTube videos are amazing to watch and whet my appetite like a Chipotle burrito.  In another section of Michigan, no one knows how the 2012 Ford Focus will drive except for Ford engineers, but from what I've read from those "in the know" (all I will say is I know where to look on the internet), ALLEGEDLY the Focus is going to have all the features the Taurus currently has and more so.  The feature list is going to rival features seen in most luxury vehicles, for $20k less! (the differences won't matter enough to spend the extra $20k for a luxury brand)  The new MyFord Touch system alone is a revolutionary technology that not even the mighty luxury brands have...and it's going to be very affordable!!! Don't believe me? Click here. (I realize this is a release for the European market, but I've been told that 90% of the features listed will come to the U.S. version of the Focus)
So, because all of these amenities are now making their way into volume brands at affordable prices, what does that mean for luxury brands, especially an economy where people are going to be more careful with their money going forward? I don't know. Hopefully the luxury brands have something up their sleeves, or are simply ok with being dressed-up versions of volume brands due to the extra profit margins on the vehicles.  For example:  I know that Lincoln vehicles may not be selling well, but it's still profitable for Ford due to platform and feature sharing.  Buick's reinvention is similar but there's more distinction between Buick and Chevrolet.  I do not know what this means for Cadillac, or how other brands are approaching this, but I'm very interested to see how the next decade in the auto industry shakes out.  I do have to say that I think luxury brands will have to have enhanced performance in order to differentiate themselves from their volume counterparts (much like the Buick Regal is a performance sedan, even though it runs on the same platform as its upcoming Malibu cousin).

What do you think?

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