Last year we had an interesting conversation with The Colonel on luxury cars...here.
This year again we have The Colonel who will share his thoughts on Canadian Luxury, lets start.
Q: Colonel what is developing in the Canadian Luxury segment?
A: You mean the dilution of Canadian Luxury!
Q: You caught on...
A: Caught on...yes...the democratization of luxury...absolutely. Especially with the established luxury manufacturers incresingly going down market to increase their sales volume.
Q: Canadians have responded positively, enthusiastically to the democratization of luxury.
A: The intellectual question had been around for decades "How low do you go for the sake of volume?" At one time the response was "We are not interested in the lower end of the market." With the increased use of business metrics, exploring the lower end of the market became tantalizing.
Q: In Canada MerBimAu owns the luxury market.
A: Yes they own the lower end, and are perhaps struggling with the higher end of the market.
Q: Struggling with the higher end?
A: Precisely...but lets blame it on challenging economic times that vehicle above $50,000 are not that easy to sell or lease.
Q: Sounds good...perhaps they are all drinking the same Kool Aid...lets focus on the lower end of the market to quickly increase sales volumes, while the higher end sort of takes care of itself.
A: Could not have said it better myself.
Q: Where is it going?
A: Imagine for a moment if other manufacturers with offerings in the lower segment really got aggressive, especially with CUV/SUV, instead of being passive.
Q: Are you saying that MerBimAu has it easy?
A: Its obvious that they have it easy, although they will make it sound as if its very challenging, especially when they do not have new product to increase sales.
Q: Some (manufacturers) have had good sales runs with vehicles that transcend winter.
A: Absolutely...and these vehicles that transcend winter are lifestyle vehicles, when a new version that strikes a note is launched it quickly tests the loyalty of many customers.
Q: It must be easier to sell vehicles in the lower segments, than the more expensive above $50,000...
A: When you can get an "entry level luxury vehicle" with exceptional brand recognition for XXX per month on a lease...obvious its easy...it moves a ton of entry level luxury vehicles.
Q: You would imagine that these vehciles have gone through a few cost saving processes...
A: A few...you know better...the entire industry is proficient at meeting price points.
Q: Could it be that the brand masks/camouflages hidden cost savings.
A: Interesting perspective...will we ever know...when they remove too much...how much do they put back in?
Q: At some point the individual spending 6 figures for their top of the line versions might see less value in his purchase.
A: Excellent point...would you rather sell 1000 high line or 10,000 low line luxury? The answer is obvious they collectively want to sell low line luxury.
Q: The competition has been timid...
A: For some inexplicable reason the Japanese competition in entry level luxury has been weak, and now the Japanese are concerned with Korean competition for their mainstream brands.
Q: As "Boomers" advance in age what will the make up of the Canadian Luxury market look like in a few years?
A: Good question, it would seem that the luxury market will increase in entry level and decrease in the higher price segments...the real question...will it still be luxury?