The American Luxury Car Is Back, and It’s Headed for China
The convention center in midtown Manhattan is swarming with journalists on the first press day of the New York Auto Show, scrambling from one rapid-fire unveiling to the next. Photographers jostle for a better angle at the Lincoln booth as the president of Ford prepares to unveil the latest luxury flagship for the brand. In a few hours, the top brass from General Motors watch with satisfaction from the front row as the president of Cadillac introduces its latest rear-wheel drive dreamboat in a wash of dramatic music and lights, to be met with a roar of applause from the gathered media. A few booths away, the latest full-size Buick concept with a gorgeous cascading fender line and loads of chrome spins away silently, gathering crowds and looking even better than it does in magazine photos.
This scene isn’t out of an episode of Mad Men, or some grainy newsreel of an Eisenhower-era Motorama, this is the 2015 New York International Auto Show, and believe it or not, full-size American luxury sedans are set to make a comeback not seen since the end of World War II. As hybrid and electric technology, self-driving systems, intelligent infotainment systems like Apple CarPlay and Android Auto all promise to radically alter the automotive landscape in the next few years, GM and Ford are preparing to go back to the future with a host of new big, bold luxury four-doors – and they’ve committed billions of dollars to make it happen sooner rather than later.
But don’t expect to see American highways fill up with the spiritual successors to the Mercury Park Lane or the Oldsmobile Holiday 88 anytime soon. American car buyers are still scooping up compact crossovers and SUVs as fast as automakers can build them. The Ford F-150 is still the best-selling vehicle, and the inoffensive Toyota Camry still dominates car sales. If the American automotive landscape doesn’t seem suited for a second coming of luxury sedans the size of a small house, that’s because it isn’t. These barges are aimed a foreign market where all-American luxury and prestige never went out of style. That market is China, and it’s become the most influential and important auto market in the world.
At the major launches at the New York Auto Show, the key word in every presentation was China, which has been the world’s largest car market since 2009. In 2014 alone, Chinese car buyers bought 19.71 million new passenger vehicles. Between 2005 and 2012, auto sales increased 221.2%, and the market is expected to grow well into the next decade. While Volkswagen is the country’s best-selling brand, most of the world’s major automakers are busy trying to get their share of the action. GM already has 22 plants operating in the country, with a Cadillac plant set to be operational by the end of the year. Last year, Ford sold 1 million vehicles in China alone.
While China’s economy expands and its upper class grows, the luxury market has continued to follow suit – and that’s great news for automakers. The luxury market is the plum of the automotive world, with profit margins as high as 15% on some models, amounting to $100 billion in profits for automakers. Audi, BMW, Mercedes-Benz, and Porsche all had record sales years in 2014, largely due to their successes in the Chinese market. But with competition heating up between the German brands, their aggressive expansion methods are beginning to erode profit margins, making it an attractive time for American brands to begin their push into the market.
Unlike emerging economies like Dubai, where the emerging wealthy have a well-known taste for supercars, the Chinese market’s taste tends to be far more traditional. Luxury means rear or all-wheel drive chauffeured cars with opulent interiors, and as a result, a new generation of models are being developed for the Chinese marked designated LWB, or long wheelbase models. These stretched models are so successful that everything from the BMW 3-Series to the full-size Range Rover gets the long wheelbase treatment with a special focus on rear passenger comfort exclusively for the Chinese market. With luxury tastes oddly reminiscent of the American prewar market, it was only a matter of time before the American automakers took notice, and they have in a very big way.
The two big American luxury brands, Cadillac and Lincoln, are relative newcomers to the Chinese market. Cadillac entered in 2009, and it had a strong 2014 with sales up 47%. Ford launched its Lincoln brand in October 2014, and is banking on Chinese sales to triple global sales for the brand to 300,000 by 2020. The brands will be competing for market share with Buick, an automaker with an unlikely history in China that goes back more than a century. The last emperor of China famously owned two Buicks, and they were also the car of choice for Zhou Enlai, the first Premier of China. Since its official launch in 1999, Buick in China has been a cash cow for GM, selling 919,582 cars in 2014 alone.
With this in mind, Buick’s Avenir concept was designed to combine the success of the Buick brand with the appeal of the LWB luxury cars in the Chinese market. Designed by GM of Australia for its proximity to the Chinese market, the Avenir could be the most American looking car ever designed for a foreign market. Its design language is so familiar that it might as well be called “Buick’s Greatest Hits.” The rear is borrowed from the ’72 “boat-tail” Riviera, the fender line from the ’53 Skylark, the “ventiport” fender grilles from a ’48 Roadmaster, and the upright chrome grille from a ’54 Wildcat. Even the classic red, white, and blue acrylic shields have been brought back to the oversized Buick badges.
While the Avenir would make for a great flagship in the American market, this car is a not so veiled nod to the influence of the Chinese market. The long wheelbase and tall greenhouse allows for maximum rear interior space, and its tech-focused rear cabin is the American answer to the Mercedes-Maybach S600. While it’s unclear whether or not the Avenir will ever see production in its current state, Cadillac’s new CT6 flagship model is set to give the brand a global presence, and it’s aimed squarely at the Chinese market.
Cadillac had an abysmal 2014 in America. While the luxury market experienced a boom year, the company’s sales slid 6.5% from 2013, selling a mere 170,750 cars. In contrast, Mercedes-Benz had a record-breaking year, selling 356,136 cars stateside. In the U.S., Cadillac not only has to contend with stiff competition from the imports, it also has a terrible image problem. Still thought of as the preferred chariot of retirees, successful people don’t drive Cadillacs, they drive Audis or Mercedes. Luckily for Cadillac, Chinese buyers don’t think that way, and bought over 73,000 cars last year.
Instead of letting the once-proud brand wither on the vine like Oldsmobile, GM sees Cadillac’s success in China as key to its overall growth, and it’s willing to bet the house on its success. Cadillac is in the middle of a major transformation, and much of its lineup can finally compete with the best Europe has to offer. As the company geared up to unveil the CT6, Cadillac president Johan de Nysschen announced that GM agreed to invest $12 billion in the brand over the next five years to make Cadillac globally competitive. Looking at the brand’s American numbers and its virtually nonexistent presence in Europe, this investment looks foolish. But factor in the Chinese market, and things begin to make a lot more sense.
While the ATS and CTS can take on Europe’s best driver-focused small and mid-size offerings, full-size sells in China, and the new CT6 is the first competitive full-size car the company has offered in decades. The big, plush Caddy may still be a boat, but it’s a modern, competitive boat. As big as an Audi A8 (the preferred car of Chinese businessmen), and as light as a BMW 5 series, the CT6 is a flagship that was designed to be as rewarding to be driven in as it is to drive. Cadillac spent a great deal of time developing the precious real estate in back, and it shows. With 10-inch infotainment screens that retract into the seat backs, a separate climate control system for rear passengers, and fully adjustable rear seats trimmed in plush leather, the CT6 has more than enough world-class goodies to appeal to the Chinese chauffeured set.
The Chinese luxury market is proving so irresistible to automakers that it’s practically raising the dead. As people have long expected Lincoln to be the next storied automaker to disappear, rumors of its impending death may be greatly exaggerated. Ford is taking a page out of GM’s playbook and betting $5 billion that it can turn the moribund brand around, and soon. As Cadillac became irrelevant in the 1990s, Lincoln all but disappeared. After decades of selling rebadged Fords and building the airport taxis of choice, the brand caused a sensation at the New York Auto Show with its Continental concept, a full-size luxury sedan with elegant rear seat appointments that the company hopes to put into production by 2017.
While the car’s blue on blue color scheme and loads of chrome recalled the days when Lincolns were the presidential ride of choice, Ford isn’t planning on outselling the Mercedes S-Class in the American market anytime soon. The company sales goals amount to a modest 300,000 cars a year globally by 2020 – about as many as Mazda sold in the U.S. alone in 2014. The Continental, and its concept of “quiet luxury” and cabin designed to be a “quiet sanctuary” should play well in a market where luxury is about being driven in comfort, not carving corners.
As the Chinese market continues to scoop up luxury cars, Detroit’s automakers are focusing on full-size cars like they forgot the meaning of the word “downsize.” The era of the land yacht in America is long over, but it’s only just beginning in China, and that will have a noticeable impact on the American automotive landscape. As the market continues to globalize, more models will be designed to appeal to as many international markets as possible. While that means better quality (and generally smaller) cars, the Chinese market has a seemingly insatiable appetite for full-size luxury cars, and it’s just too big to ignore.
As long as China is the world’s largest automaker, its tastes will dictate new models. And as long as China wants full-size luxury cars, American companies will build them. Cadillac and Lincoln hope that in a few years’ time, they’ll reemerge as global luxury leaders, and as Volkswagen has shown, they won’t necessarily have to do it with help from the American market. After years in the wilderness, American luxury is back, and it’s ready to reconquer the world. Just don’t expect things to change around here too much.
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