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Move over, Mercedes. Even Mazda has squeezed in on the status car craze.
By Preston Lerner |

It used to be so easy to be rich. No guilt. Low taxes. Scads of good help. The toughest decision of the year was whether to buy a Lincoln or a Cadillac. These days, being rich isn’t so pleasant. Taxes are up. The stock market is down. The dollar’s barely worth a plugged nickel. And choosing a luxury car is almost as perplexing as ordering Sashimi at a sushi bar.

During the past decade, more than a dozen foreign automakers have gotten into the luxury car business. Besides giving affluent buyers a host of new options, this flood of imports has also helped redefine the values of buyers. Mercedes-Benz has replaced Cadillac as the automotive symbol of success, for instance, and many rising young professionals now prefer BMWs rather than Lincolns.

The uppermost end of the luxury car market has traditionally had a foreign tinge-Rolls-Royce, Ferrari, and their low-volume competitors. In recent years, though, manufacturers with more middle-class reputations-say, Volvo, Saab, Audi, and Peugeot-have begun fighting for a piece of the pie. Even Toyota, Nissan, Honda, and Mazda now offer models that break the $20,000 barrier.

The baby boomers have come of age, and they want cars that reflect their increasing wealth and maturity. Combine this with the historical fact that expensive cars are easier and more profitable sales and it’s easy to understand why automakers are flocking to this once-rarified market. Says Michael DeMarco, manager of marketing strategy for BMW of North America, “What you’ve got to say, eventually, is, ’I want in that market.’”

In the past year alone. Range Rover began exporting sport utility vehicles for the pheasant-and-Perrier crowd, and Merkur and Sterling got into the luxury touring sedan business. The Japanese version of the Sterling, the Legend, is the shining jewel of Honda’s new upscale Acura Division. And by the end of the decade, Nissan and Toyota are also slated to begin selling luxury cars in newly created prestige car divisions of their own-Infiniti and Lexus, respectively.

While the idea of Japanese luxury cars is novel, if a bit jarring, the concept of luxury car divisions is nothing new. For decades, General Motors marketing strategy was based precisely on the notion that car buyers move up as they move on. You started with a Chevrolet, worked your way through the ranks of Pontiac, Oldsmobile, and Buick, and ended up in a Cadillac. The price difference between a top-of-the-line Buick and a bottom-of-the-line Caddy was relatively small. In terms of prestige, though, it was incalculable. As Ford analyst Ray Windeck-er puts it, “It’s not size. It’s not styling. It’s not cost. It’s image,”

And image is what luxury cars are really about. Stylists can make them look better and engineers can make them drive better, but the bottom line has less to do with appearance and performance than it does with creating cars that radiate status and prestige.

That’s where the marketing men come in. They’ve realized that it’s no longer enough merely to offer expensive cars with the expectation that they’ll appeal to people with enough money to afford them. “The fact is that a car has to have an identity of its own,” says Lee Maas, owner of Classic BMW and Classic Ferrari. Image is considered so critical that Nissan came up with the name “In-finiti”-it’s misspelled on purpose-before coming up with a car. “The name had to feel upscale,” says Infiniti general manager William R. Bruce.

As never before, automakers are targeting narrowly defined segments of the market. Niche marketing, they call it, and if you’ve got a niche, some enterprising manufacturer plans to scratch it. Take the Merkur Scorpio, the Lincoln-Mercury import that looks-and is priced-|like a poor man’s Mercedes. The target market is the luxury touring sedan buyer who finds the Mercedes 300E a bit too pricey, the Lincoln Town Car a bit too old-fashioned. and the Acura Legend a bit too common. “There’s a group of young people who are looking for a type of luxury that is a littie nantraditional to make their own statement–yeah, they made it, but they’re not conformists,” explains Merkur marketing plans specialist Bruce Gordon.

Gordon might well have been describing the typical Mercedes buyer of the Sixties, when the company established a firm foothold in the United Slates and began redefining the entire market. “The term ’luxury’ in a European context was different from in an American context,” says Hans Jordan, vice president for marketing at Mercedes-Benz of North America. “It meant wood, leather, and hand-produced items rather than automatic transmissions and electric windows. Slowly, bit by bit, the perception of what a luxury car is changed.”

Although domestic manufacturers still do a sizable chunk of luxury car business, they aren’t imnune to European influences. It’s no coincidence that Cadillac and Chrysler went to Italian designers when they decided to build new luxury cars-the Allanté and the Chrysler TC by Maserati. But while these models may help American automakers recapture some lost prestige, there’s little question that Mercedes has become what a jealous executive at a rival company calls “the gold standard,”

Perhaps the most aggressive of the many pretenders to the throne is BMW, which has outgrown its sports car image but is still saddled with a reputation for being the ultimate yuppie-mobile. Although worse things could happen to a car company, BMW wants to be upper class rather than upwardly mobile. Ergo, the new 750iL, a $69,000 beauty-and-the-beast (a 300-horsepower V-12 engine) that compares favorably with anything in the Mercedes stable. “That’s the car that’s going to enable us to rebuild our image from the top down,” DeMarco says.

The Acura Legend and Sterling 825S ad campaigns offer a textbook example of image-building. The Legend is billed as a well-crafted and fairly priced package offering a touch of luxury and a powerful V-6 engine. The Sterling comes off as a proud British mix of a sumptuous leather- and-wood interior and high-tech engineering. You’d never guess from the ads that the cars are virtually identical aside from styling.

You gotta have an image. Volvo recently introduced an elegant new 780 coupe styled by the famed Bertone of Italy design house, but safety remains the cornerstone of its persona. As its current television campaign demonstrates, a Volvo is the sedan to drive in case you have to carry a truck on the roof. Saab”s also gone uptown in recent years. but it continues to make a virtue out of quirkiness. So the cars look different. They’re supposed to look different. The underlying message is that Saab is a car for buyers with minds of their own.

No marque demonstrates the power of imagery better than Jaguar, a name that is today synonymous with luxury cars. As recently as ten years ago, though, the company was in a shambles. U.S. sales were negligible, and the few cars that were sold had a not-entirely-unwarranted reputation for suffering every automotive malady known to man. Even so, people wanted Jaguars because they exuded Old World class and distinction in a fashion that, say, German luxury cars didn’t. So when the company finally cured its reliability woes, sales skyrocketed-from 3,023 in 1980 to 24,464 in 1986.

But 1987 wasn’t a banner year for Jaguar or the rest of the luxury car industry. Although the figures are a bit misleading-1986 sales were artificially inflated by buyers who made purchases before the new tax laws went into effect-there’s no question that plummeting stock prices have taken many potential customers out of the low end of the luxury car market.

Maas, for one, sees a silver lining in this apparent cloud. “Every Tom. Dick, and Harry can’t drive up in a Cord or a Duesen-bergorafiickard,”hcsays. “Now, when you see a guy driving a $60,000 Porsche 911, you know he can afford it. That’s the way it’s supposed to be.”