Lincoln Cadillac Struggle to Get Luxury Groove Back

Lincoln, Cadillac Struggle to Get Luxury Groove Back

Both brands suffered deeply in the U.S. financial crisis, when their parents General Motors and Ford fought just to allow their core business to survive. But their revivals remain stifled: despite showing great technology and power in their vehicles, hand stitched leather seats and the other signs of opulence, in markets around the world they are also-rans.

DETROIT -- Luxury carmakers should all be smiling -- the resurgent U.S. market, and China's booming wealth sector, and other rising large economies, are delivering strong sales and profits to the likes of BMW (IW 1000/36), Mercedes Benz, and Bentley.

But not venerable American brands, Ford's Lincoln (IW 500/6) and General Motors' Cadillac (IW 500/4).

It's been decades now since the two U.S. models set standards for excellence and comfort, ferrying kings, presidents and Hollywood stars -- and both know it.

The market for luxury cars has soared around the world, with the Germans breaking new sales records despite the recession-shrunken European market. Double digit sales growth in China underpinned that.

Yet Lincoln and Cadillac struggle to keep sales from falling: neither has the respect and desirability they need among under-50 buyers in many markets, including the United States, where BMW and Audi are chopping into the demand of the moneyed younger generation.

Last year, Mercedes sold 295,000 cars in the U.S., BMW 281,000, and Audi 139,000, all up one to 2%.

Meanwhile Cadillac sales fell 2% to 150,000 units and Lincoln lost 4% to 82,000.

Both brands suffered deeply in the U.S. financial crisis, when their parents General Motors and Ford fought just to allow their core business to survive.

That set the luxury lines back several years against competitors, at a time when the markets in large rising economies like China and Brazil started to take off.

But their revivals remain stifled: despite showing great technology and power in their vehicles, hand stitched leather seats and the other signs of opulence, in markets around the world they are also-rans.

Redefining the Market

"Right now you have to actually convince people there are American luxury cars," said Jeremy Anwyl of auto industry specialist Edmunds.com.

Putting out $50,000 for a Cadillac or Lincoln does not obviously explain itself to onlookers or neighbors.

"With a Mercedes you don't need a translator to explain why you've bought that vehicle," Anwyl said.

General Motors chief Mark Reuss admits the challenge is deep. "It's going to take a long time... we're going to do it piece by piece."

But in some ways, the canvas is wide open, Cadillac and Lincoln having never made it into the wavelength of younger buyers.

"In many places people don't even know Cadillac, so it is a fun job," Reuss told AFP. "You don't have to undo what's been done."

Cadillac staked its future last year on the ATS, its four door sedan that runs in the $33,000-$55,000 price range.

The elegant redesign won awards, including the North American Car of the Year at the Detroit auto show this week.

Sales have been limited, however, after a late year launch at dealerships.

Redefining the Brand

On Tuesday Cadillac introduced its electric hybrid ELR, with more sport lines and a 300 mile  range on its battery alone.

The maker's line, though, is still not as full as it German competitors, and lacks the stunning high-end sports cars that can lure entry level buyers to their brand.

Lincoln is the same: its line is not as broad, and its identity as a premium brand is not strong around the world.

Having rebuilt itself from the crisis, the company is now boosting spending on the brand, launching the sporty MKZ sedan last year.

At Detroit this week, it introduced a new concept crossover, the MKC, to take on Mercedes' GLK350 and the Audi Q5.

For Lincoln, the MKC crossover concept "is important because it needs to broaden its line," said auto industry analyst Dave Sergeant at JD Power.

Another problem, says Anwyl, is that both Lincoln and Cadillac are competing only in the "near luxury segment."

For Anwyl, real luxury is pushing the $100,000 a car level, with Mercedes selling its top-line car at around $200,000 and Bentley, which sold 8,500 vehicles last year -- 60% in the U.S. and China -- starting at $200,000.

Reuss said the market battle is focused on craftsmanship, and that luxury will be "heavily design oriented."

"At end of the day, it is a reflection of who you are."

In those terms, the Americans know that, for the moment, everyone sees themselves as German.

Paul Handley, AFP

Copyright Agence France-Presse, 2013

TAGS: Innovation
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