I have heard people give lots of reasons for buying a new car.
I never heard anyone say, “I bought it because it’s the best-selling car on the market.”
And that’s one reason why the messages coming from leaders of luxury brands of late at least sound refreshing.
The messages are more about strong product and processes — which benefit the consumer — and less about hitting an arbitrary sales rank or number. That, as we know, can lead to an overdose of incentives and all sorts of other value-wrecking behavior.
Here’s Daimler AG boss Dieter Zetsche, commenting last week on Mercedes-Benz and the global luxury race:
“The volume lead should be the consequence of having the best offering,” Zetsche was quoted by Reuters as saying. “If we accomplish this, it is a natural consequence that more people will choose us.”
And then there was this last month from Audi’s U.S. chief, Scott Keogh:
“Without a doubt, the marketplace is tightening, and what I think that’s going to require is good business discipline. Drive demand for your products; don’t get overstocked and oversupplied; keep your pricing power discipline.”
Now, these guys didn’t get to where they are by embracing the character-building benefits that come from finishing last.
If Mercedes-Benz has “the best offering,” naturally “more people will choose us.”
For years, Zetsche has been pushing Mercedes to pass BMW to become the world’s largest luxury automaker by 2020. Jeff Bracken, Lexus‘ U.S. chief, has said his bosses at Toyota didn’t give him the job hoping to settle for silver.
In the critical U.S. market, Lexus was a distant third to Mercedes in 2013, the year Bracken took over. Last year, Lexus overtook Mercedes to finish just 1,400 units short of BMW.
Lexus also recorded sales highs in Europe, China, Japan and other markets en route to a worldwide sales record — a feat that global boss Mark Templin attributes to a renewed emphasis on styling and safety.
Granted, what these leaders say on stage and what they do may be two different things.
A soft January for luxury has already triggered some incentive hikes. And Keogh, for one, acknowledged looming temptations when he said: “Let’s see if the preaching can hold true in a market that isn’t growing by double digits.”
But if Keogh and his peers can lead sales drives, they should lead in all sorts of other ways, too.
That includes making sure that when they provide the “best offering” that Zetsche spoke of last week, they deliver it in product, in showroom experience, in overall excellence — not in over-the-top incentives.
The long-term strength of their franchises depends on it.