In today's premium automotive landscape, there is also seemingly one word that is driving every manufacturer's business strategy...'China'. Virtually every premium and near premium car brand from Cadillac to Acura to Infiniti to Lexus to Mercedes has set their sights on the Chinese market. And there is good reason to do so. The premium end of the Chinese automotive market is outpacing the total market, with Jan - Jun 2014 premium brand sales up 30% over 2013. And according to projections by McKinsey and others this growth is expected to continue for the better part of the decade. China is predicted to leapfrog the US to become be largest premium car market in the world by 2020.
But will every brand succeed? Some evidence suggests that the premium automotive battle has already been fought and won on other fronts, and that the premium Chinese market will look a lot like the American and European markets when it's all said and done. And the one word that will separate the winners from the losers is the same word that separates them in every other market...'brand'. Because more and more, premium brands are managed globally and they behave and perform consistently across markets.
The fact is that in Europe, Mercedes, BMW and Audi combined command more than an 80% share of the premium car market. And the US post great recession market structure has changed significantly. Since 2007, German brands have captured 12 share points, while Japanese and US brands have lost significant share. The Germans now command 45% of the US premium market.
Why is this? The fact is, that above certain price points, gorgeous sheet metal and state of the art electronics are not enough. Premium customers are buying into so much more than the hardware. They are buying into a brand vision, provenance and story. They are buying into a unique brand experience that defines a style of life. And the German automotive brands have been unwavering in telling and delivering on their brand stories. And that's why many car companies will fall short...they will fail to tie the enormous business opportunity to a compelling brand idea. Instead, they will continue to play a 'me too' game, searching for their brand's flavor of the month, and falling behind in volume and price points as they do.
So are all non-German premium automotive brands doomed? Not necessarily. But they will need to think differently. They will need to look inside themselves and search for their special DNA. The DNA that allows them to do what no other premium brand does. The DNA that helps them architect a unique and valuable customer experience. And then they need to be relentless in consistently delivering that experience at every touchpoint, for every customer, in every market. Thus far, the only non-German brand that appears to be doing this in China today is Tesla. And in doing so, they may very well be establishing a new standard for all premium automotive brands.
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