Opinion: Luxury car brands don’t get luxury

Luxury automakers are facing stormy times. Mercedes-Benz, Audi, BMW, Porsche, and Bentley — some of the most renowned brands in the luxury automotive space – are experiencing a dramatic downturn in demand, particularly in critical markets like China. In their latest earnings reports, all these brands highlighted “challenging market conditions.” But the bigger question is: why are these conditions so challenging? There’s an inconvenient truth that automotive executives hesitate to confront: despite positioning themselves as luxury, many brands fail to deliver a true luxury experience. Most automotive brands are “luxury in ambition only,” offering a well-packaged version of the ordinary. Over the last three years, many brands have raised their prices at unprecedented rates without providing client experiences that justify these significantly higher price points. This disconnect stems from the industry’s engineer-driven DNA. Automotive brands have a tradition of engineering excellence, celebrating each new technical advancement. However, luxury is about much more than precision engineering; it’s about creating emotional resonance and long-term client relationships. Luxury perception depends on crafting experiences that leave clients feeling valued, understood, and, ultimately, loyal. In these areas, luxury car brands fall notably short. Lessons from China Consider the Chinese market, a critical driver of global luxury growth, where consumer expectations are sky-high. In China, luxury buyers demand much more than just a product; they expect an elevated, seamless experience and are uncompromising on this. As highlighted in recent research on China’s auto industry, many brands remain anchored in a product-focused mindset, emphasizing features, performance, and specs over brand experience and storytelling. This transactional approach alienates the discerning Chinese client who values status and a connection to the brand’s story. If brands wish to succeed, they need to rethink their entire strategy. Take the Chinese brand Nio, which has completely reinvented the client experience. Nio Houses serve as cultural spaces, going beyond mere transaction points. Similarly, Porsche has begun to offer a comparable experience with its newly imagined Porsche Studios. While the client experience there is impressive, the approach has not yet been scaled enough to achieve a global impact. And global impact is critical because the challenges brands face in delivering luxury extend beyond China. The struggle to truly understand luxury permeates the luxury automotive sector, regardless of the market. As client expectations change rapidly, this is the most critical moment for the luxury automotive industry. There is no time to be complacent or to blame external market conditions. The issues are internal, and brands must take responsibility for not delivering holistic luxury experiences. Dealerships: A bottleneck in the luxury experience A foundational hurdle is the dealership model itself. From Mercedes to Bentley, the client’s experience of service, sales, and aftercare can be shockingly similar. For luxury brands, client experiences should be personalized, seamless, and attentive. They need to stand apart from other brands based on their unique brand story and the target emotions they evoke. Yet, the current dealership model delivers a “sea of sameness,” emphasizing sales transactions over client relationships. Customer service at the point of sale is often robust (a term that can be catastrophic in luxury, as each client experience should be extraordinary), but it often deteriorates during the ownership journey. After-sales service, in particular, can be dramatically underwhelming, with clients facing long wait times for appointments, limited communication, and a disconnect between their expectations and the service delivery. In fact, mystery shopper exercises across luxury brands rarely reveal a luxury car salesperson who inspires or articulates the essence of the brand story. Conversations often default to specifications, test drives, quick deals, and upselling on car packages, rather than taking the time to understand and build rapport with the client. This emphasis on transactions over relationships stands in stark contrast to what luxury truly represents. Disappointment at every turn My personal car shopping experience underscores just how far luxury car brands are from delivering a true luxury experience. For the past 18 months, I’ve been trying to secure a Porsche 911 GTS Targa from my local dealership in the US, yet I have received no information on when an allocation might become available or how long the wait could be. The sales team has even discouraged me repeatedly, citing high demand and suggesting I buy the convertible – a model I already own. There is nothing remotely luxurious about feeling pressured to buy something that doesn’t suit my desires and being left in the dark. Since purchasing my 911 Convertible, many aspects of the dealership interaction have been disappointing. One day, when the convertible roof failed to open just before a planned road trip, I took two hours out of my busy schedule to drive it to the dealer, only to be told that the next available appointment was three weeks away. After driving the entire road trip with the roof closed, I later discovered that the actual fix took only a few minutes. This wasn’t the only disappointment. Recently, my wife wanted to buy a BMW X5. After spending hours on the test drive, the salesperson promised to send a quote but never followed through. It was a stunning lapse in follow-up, a level of service that simply doesn’t exude luxury. As a client, why should I care about a brand if the staff does not care about me? The solution? Transformative training All of this begs the question: what would it take for luxury automotive brands to truly embody luxury? Training is the obvious answer – but not the one-time, box-checking training that most brands deploy. As seen in other sectors, training focused on repeating client names or product scripts does little to instill the emotional intelligence necessary to deliver luxury experiences. Luxury training must be transformative, reshaping the approach to client interactions and instilling a deep understanding of what luxury means beyond the product. Sales teams need to be educated on the psychology of luxury purchases, especially why clients pay premiums and how emotional connection fuels loyalty. It’s critical to integrate storytelling into the sales journey, making every conversation an opportunity to inspire and engage clients with the brand’s legacy and vision. Additionally, training should emphasize the importance of teamwork, reinforcing that every interaction matters. But given the significant shortcomings in the dealership experience, training needs to go beyond client-facing staff to include headquarters and leadership teams of car dealerships. Systemic issues cannot be fixed on the sales floor. The key question every brand needs to ask is: how should our experience differ from that of our competitors? Training also needs to be continuous, with follow-ups that allow teams to refine and embed luxury principles into their interactions. Implementing a phased training approach over several months, rather than a single session, ensures that employees understand the nuances of luxury and apply these insights consistently. Redefining the future of luxury cars In the end, luxury is not something you engineer but something you feel. With competition heating up and client expectations at record highs, brands that refuse to make this shift will face both declining sales and rapidly eroding brand equity. What brands are currently experiencing in China serves as a warning of what lies ahead globally if no drastic action is taken. The inability to create luxury experiences at scale is the automotive industry’s biggest vulnerability, aside from the challenging transition to electric cars. It’s time to deliver true luxury that goes beyond mere ambition. The clock is ticking. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others; Daniel holds an MBA and a Ph.D. in luxury management, and has received education from Harvard Business School. Sign up for his masterclasses at the Jing Academy. Follow him: LinkedIn and Instagram. All opinions expressed in the column are his own and do not reflect the official position of Jing Daily.

Opinion: Luxury car brands don’t get luxury

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Published November 04, 2024

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Opinion: Luxury car brands don’t get luxury