Business
3:15 pm
Mon December 24, 2012

Detroit Three Look To Revive Their Luxury Brands

Originally published on Mon 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 2012 National Public Radio. To see more, visit http://www.npr.org/.