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Detroit Three Look To Revive Their Luxury Brands

Dec 24, 2012
Originally published on December 24, 2012 6:19 pm

GM, Ford and Chrysler are turning their focus to selling luxury cars — something they haven't succeeded at in decades. They're hoping that success in the competitive but lucrative luxury sector will signal that the U.S. auto industry's comeback is complete.

"If you've fallen from the luxury space and the reputation of the brand has been damaged, you have to now go out and make dramatic changes," says Marshal Cohen, a retail analyst who specializes in luxury. "You have to really clearly articulate to the consumer the reasons why this is a luxury product."

He says to regain luxury status, a company has to not only improve the quality of its products, it has to change the minds of consumers.

"And sometimes that can take a long time, particularly with a product like an automobile that has low frequency — you don't go out and buy an automobile every couple of weeks like you do some fashion items or some footwear products," Cohen says. "So it makes it a little bit more challenging to go out and change the image of the brand and you have to have the consumer become the billboard or your spokesperson to help you do that."

This is important because the luxury car represent huge profits. Lincoln, which is owned by Ford, is trying to rebrand itself. The company recently changed its name from just Lincoln to Lincoln Motor Co. And it's introducing new cars meant to shake off its stodgy image.

Cadillac, which is owned by GM, has introduced a new car, the ATS, which is meant to compete with the Europeans.

Michelle Krebs, an analyst with Edmunds.com, says luxury is vital to the future of the American car companies.

"It's important globally. Cadillac is ramping it up in China, which is a huge luxury car market," Krebs says. "If you're going to go into emerging markets like that, where wealth is building, you gotta have luxury brands. Those markets are very sensitive to the image of those brands."

None of the American brands make into the top five for sales or ratings. Cadillac may have an image problem, but the name Cadillac still has a meaning. Say something like "He's the Cadillac of radio reporters," you know what that means.

Krebs says it's much harder for Ford to turn the Lincoln brand around.

"It was always clear what Cadillac was. Everybody knows the El Dorado from the 1950s — and the kind of cutting-edge design and always ahead on technology," Krebs says. "What is Lincoln? I mean, that's a challenge."

Apparently the executives at Lincoln aren't 100 percent sure either.

Lincoln Motor Co. turned to social media and to Jimmy Fallon, who's 38, to get young buyers. In an ad campaign for the new MKZ, Lincoln hired the comedian to encourage and curate tweets about road trips.

"What they're going to do is — and I don't know why — they're going to put all of this into a commercial," Fallon says in a video about the campaign, called #steerthescript.

While the American luxury-car makers figure out what their images will be, the Japanese and European automakers already have a place in the minds and garages of consumers.

Detroit carmakers have solved a lot of serious problems in the past few years, including reducing labor costs, turning profits on small cars and improving quality. But, Cohen and Krebs say, selling luxury cars might be the hardest part of the turnaround.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

There's no definite way to tell that the U.S. auto industry's comeback is complete. But, here are a few signs: sales at the Detroit three are up, the federal government has begun the process of selling off its stake in General Motors - more on that in a few minutes. And now, GM, Ford and Chrysler are turning their focus to something that they have not succeeded at in decades: selling luxury cars.

NPR's Sonari Glinton tells us more.

SONARI GLINTON, BYLINE: The Detroit carmakers have solved a lot of serious problems in the last few years. Their labor costs are down. They can turn profits on small cars. Their quality is improving. The last and, so far, the toughest nut to crack is luxury, but they're trying hard.

(SOUNDBITE OF AN AD)

GLINTON: In its brand new commercial for its car the 300, Chrysler is dusting off the Motown records and brought Berry Gordy, the founder of Motown, out of retirement to hock it's brand.

(SOUNDBITE OF AN AD)

MARSHAL COHEN: If you've fallen from the luxury space and the reputation of the brand has been damaged, you have to now go out and make dramatic changes. You have to really clearly articulate to the consumer the reasons why this is a luxury product.

GLINTON: Marshal Cohen is a retail analyst. He specializes in luxury. He says to regain luxury status, a company has to not only improve the quality of its products, it has to change the minds of consumers.

COHEN: And sometimes that can take a long time, particularly with a product like an automobile that has low frequency. You don't go out and buy a new automobile every couple of weeks like you do some fashion items or some footwear products. So it makes it a little bit more challenging to go out and change the image of the brand. And you have to have the consumer become the billboard or your spokesperson to help you do that.

GLINTON: This is important because the luxury car represents huge profits. Lincoln, which is owned by Ford, is trying to rebrand itself. The company changed its name from just Lincoln to The Lincoln Motor Company. And it's introducing new cars meant to shake off its stodgy image.

Cadillac, which is owned by GM, has introduced a new car - the ATS - which is meant to compete with the Europeans.

Michelle Krebs is an analyst with Edmunds.com. She says luxury is vital to the future of the American car companies.

MIICHELLE KREBS: It's important globally. You know, Cadillac is ramping it up in China, which is a huge luxury car market. If you're going to go into emerging markets like that, where wealth is building, you got to have luxury brands. Those markets are very sensitive to the image of those brands.

GLINTON: Now, none of the American brands make it into the top five for sales or ratings. Cadillac may have an image problem but the name Cadillac still has a meaning. So if I said he's the Cadillac of radio reporters, you'd know what I meant.

Krebs says it's much harder for Ford to turn the Lincoln around.

KREBS: It was always clear what Cadillac was. Everybody knows the El Dorado from the 1950s, and the kind of cutting-edge design and always ahead on technology. What is Lincoln? I mean, that's a challenge.

GLINTON: Apparently the executives at Lincoln aren't 100 percent sure either.

(SOUNDBITE OF AD)

GLINTON: Lincoln Motor Company turned to social media and Jimmy Fallon, who's 38, to get young buyers.

(SOUNDBITE OF AD)

GLINTON: While the American luxury carmakers figure out what their images will be, the Japanese and European automakers already have a place in the minds and garages of consumers. Both Marshal Cohen and Michelle Krebs say the last part, luxury, might be the hardest part of the turnaround.

Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.