Boomers and the demise of domestic luxury cars
The 2015 LA Auto Show – the first of the U.S. 2016 model year events – closed on the Sunday after Thanksgiving.
Who knows, maybe somewhere in the glittering array there were vehicles as transformative as in the 1990 show when the shiny new Lexus LS400 and Infiniti Q45 were on display. Thanks to the Boomers they would play key roles in the luxury car revolution that would humble Cadillac and Lincoln over the next 25 years.
Little Boomers grew up hearing the Cadillac of “such and such” meant the “such and such” was simply the best. The 1959 Eldorado, the pinnacle of Caddy cool, tells you everything you need to know about why our parents told us so. And back in 1990 American luxury still ruled: Cadillac sold over a quarter million units and Lincoln had its best year ever at 231,660.
But their leadership was on a slippery slope; the times they weren’t just a-changing, they had already changed.
Since the 1960s Boomer buyers had been crucial to import economy car acceptance. We appreciated their zippy handling, buzzy engines and stiff road feel versus floaty domestic suspensions and big car parking issues. And, to offset the macho allure of V-8 Detroit brawn, we told critics they were the intelligent choice.
Employing advertising themes that stressed engineering, rationality and form-follows-function design through the 1970s and 1980s, European brands steadily acquired a patina of sophistication, upward mobility and intelligence.
Our parents grumbled and snarky neighbors muttered “yuppies”, but in 1990 we bought 78,400 Mercedes, 63,600 BMWs and thousands of Porsches and Jaguars. Also, the near-luxury, category was firmly established – led by Volvo, Saab, Audi and Honda’s new Acura line which hit sales of 138,000 that year (Motor Trend).
External events hadn’t helped domestics while all this was happening. Back-to-back oil supply crises in the ’70s/early ’80s, the rise of environmentalism and pressure to downsize in the name of energy efficiency had forced Detroit to make hasty product decisions that backfired on quality and brand respect.
When true Japanese luxury arrived, upwardly-mobile Boomers were primed.
As competition intensified, luxury import sales exploded in the coming decades.
In 2014 Americans bought almost two million luxury/near luxury vehicles – 86% of them import brands; Mercedes (356,100), BMW (339,800) and Lexus (311,400) each sold more units than Cadillac (170,800) and Lincoln (94,500) combined (Automotive News data.)
Infiniti, however, lagged from the get-go; 1990 sales were only 38% of Lexus – 25 years later the ratio still holds.
The culprit was “creativity.”
Gravitas vs. too cool for school
The Lexus launch ad campaign patiently told an intelligent product quality story focused on fit, finish, power and driving smoothness – key attributes of the luxury car segment.
At first, the work was criticized by advertising “experts” as staid and unimaginative. However, with 20/20 hindsight – after hugely successful sales – it won belated recognition, most notably for the “Balanced” TV commercial.
Experts aside, the work refuted stereotypes of Japanese products as econo-boxes for the masses. And how! In 1990 the campaign gave 63,500 early buyers specific bragging rights to support their intelligent decision-making.
Meanwhile, Infiniti stumbled.
It’s usual to blame the introductory “rocks and trees” ads (link hat tip: Jalopnik.) Sure, their attempted Zen-like aura – serene nature scenes and sophomoric voice-overs – had less authenticity than Walmart sushi. But the product itself also contributed, again with the misplaced notion that unorthodox equals creative.
Despite a beautiful interior and superb driving characteristics, the Q45 stylists were so determined to stand out in the prestige car club that they forgot to fully complete the membership application: the car had no grille and its fussy afterthought badge was clunky.
Infiniti’s creative overload unintentionally created an image of style over substance, the uncool antithesis of intelligent European and Lexus branding. Sadly, the Q45 debuted as a discounted model and the butt of late night TV jokes. Only 24,000 were sold in 1990 and the brand is still regarded as a 2nd tier luxury player today.
Boomers still rule the luxury car market
It is well known that consumers aged fifty and up buy at least half the new cars and light trucks sold in America. According to automotive researcher, IHS, in 2013 the median age of all brand buyers was was 52.
It’s also well known that automotive marketers – eager to avoid being tagged as geezer pleasers – direct the bulk of their targeting to younger prospects. And, because conquesting customers from competitors is costlier and more difficult than retaining existing buyers, the mantra is grab ’em when they’re young.
However, both these strategic goals leave a great deal of money – brand share – on the table, especially in the luxury segment.
- First, IHS reports the highest brand loyalty rate is only 58% (Mercedes Benz) and falls off significantly among Tier Two brands. So there is plenty of brand-switching opportunity out there for disruptives willing to intelligently persuade prospects.
- Second, most Millennials are decades away from the earning power that allows luxury car indulgence. Long term brand building – rebuilding in the case of Lincoln and Cadillac – is vital, but not at the expense of sales. Unless, of course, those ever-patient dealer principals are happy to forego extra profits and wait until the Millennials start turning fifty around 2030. Sure.
Engaging Boomer-Plus luxury car buyers, really engaging us, isn’t easy; after all, Madison Avenue is primarily staffed with Millennials who are great at – rocks and trees alert – creativity but are mostly inarticulate when it comes to Boomer-speak.
But, for those willing to “actually strive to do the deeds,” intelligent help is close at hand.