What is luxury? Featured

7:00pm EDT December 31, 2006

The term “luxury” is ever changing, according to car dealers who know.

“It is not easily defined in auto sales, especially when there are so many choices in the premium segment,” says Carlos Dague, new care sales manager at Ganley BMW in Middleburg Heights. “A Cadillac or Lexus driver defines luxury differently than a BMW buyer.

“Luxury-car buyers — and lessees — expect more than ‘all the toys,’ because virtually every car or SUV can be either factory-equipped or dealer-installed with everything from 22-inch chrome wheels and custom leather to multiple DVD screens. Luxury is defined more by the experience the buyer/lessee has with the dealership before, during and after delivery of the new car.”

Smart Business asked Dague how the market is responding to the demands of the luxury-oriented client.

What is luxury?

Traditionally, luxury in an automobile meant power everything, leather, whitewall tires, an isolated, cushy ride, and cars the size of an aircraft carrier.

In today’s market, luxury is more defined by the wants and needs of the driver, usually as it relates to the driver’s self-image and his or her peer group. The marketing term for these variables is ‘psychographics,’ which we spoke about in a previous article.

How do dealerships accommodate buyer expectations?

Buying or leasing a new car in this segment is more of a courtship followed by a marriage, as opposed to the idea that you buy the same day you visit and the new-car delivery is the end of a short-term relationship. Given this long-term view, dealerships have invested enormous amounts of money in their facilities and in training and keeping quality salespeople.

Most customers in this market are looking for a dealership that offers more than a cramped showroom, stale coffee and a portable TV with no remote. Many dealerships now have remodeled or new showrooms that are well-lit, high-ceilinged and very spacious. The service waiting areas have leather furniture, large TVs and wireless Internet access.

The sales professional who facilitates the transaction is a great listener who shows customers features and benefits that are relevant to their individual needs and wants, rather than a ‘one-size-fits-all’ presentation. Various financing and leasing options are presented in a no-pressure, multi-choice format that allows the customer to make an informed decision, rather than an impulsive one.

How have these expectations affected this segment of the market?

Customers of this market segment have really benefited, primarily because of the keen competition to earn and keep market share among manufacturers. Dealerships have become nicer places to go to and do business, and the whole experience has become more professional and hassle-free.

Manufacturers want the transaction price (selling price) to be close to the factory MSRP so they have narrowed the profit margin that dealers have to negotiate. This strategy eliminates much of the time spent dealing on a car, and customers don’t have to be professional negotiators to get a fair price.

The premium segment considers customer time to be more valuable than other segments do, and the dealership that can save its customers time and hassle while providing a great experience will be very successful.

What does the future hold for this segment?

Manufacturers know that as long as people want more than basic point A to point B transportation, this segment will always be fertile and profitable. The bar is constantly being raised, however, and value for dollar is purely subjective, especially when it comes to the marketing of this segment. What would happen if we couldn’t use computer-generated effects for our commercials?

The one constant that seems to add value is for the manufacturer to create a niche that is unique and for the dealership that provides more value in service after the sale.

How does a dealership create value in this segment?

A successful premium dealership will take a long-term view of its relationship with its customers. It’s much easier and profitable to keep current customers and their referrals than constantly trying to find new ones.

We concentrate on the things that add immediate and lasting value: no-charge pickup and delivery of cars for service with free BMW loaner cars; showing cars and test drives at the customer’s home or office; consistent follow-up during the ownership/lease period to assure we are giving our customers a premium experience; and making sure that each visit is customer-focused, before, during and after the sale.

CARLOS DAGUE is the new car sales manager at Ganley BMW, Middleburg Heights. He has been selling BMWs since 1982. Reach him at (440) 843-3552 or xfive44@aol.com.