What's The Point Of Owning A 'Luxury' Car Anymore?

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Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.


1st Gear: Lincoln Laughs As Luxury Languishes

The American Customer Satisfaction Index has a new survey out about how much people like their cars. And after years of not being satisfied with their cars, often thanks to confusing tech and infotainment systems, people are more satisfied than they used to be. The marque at the top of the pack, believe it or not, was Lincoln. Ford’s fancy-ish brand topped even Honda, BMW and Toyota.

But the survey points out how the gap is closing between “luxury” brands and non-luxury brands. Which makes sense! It used to be that a cheap or affordable car meant driving something that was merely adequate; these days you can get a Ford Focus with Bluetooth, an infotainment system, leather, all the latest safety features and more. Maybe branding isn’t enough? Via The Detroit News:

Seventy-thousand customers were interviewed about 24 auto brands for the consumer satisfaction survey. Sixteen of the brands showed increases in consumer approval, while five declined — including luxury brands Cadillac, Mercedes-Benz and Acura.

Claes Fornell, ACSI chairman and founder, said the figures show the gap in consumer perception may be closing between mass-market and luxury brands.

“The rise of mass-market vehicles may well be at the expense of luxury brands in the sense that buyers now see little differentiation between luxury cars and regular ones,” Fornell said. “If there is little difference, why pay more? Exclusivity may not be enough.”

Why pay more indeed?

2nd Gear: VW Dispute Resolved And It Wasn’t That Bad After All

Today, the dispute between Volkswagen and its suppliers that led to a halt in Golf production was seemingly resolved after lengthy talks. The cash-strapped automaker asked its suppliers to cut prices, but that request didn’t go over very well.


Interestingly, according to Reuters, it may not have that much of an impact after all:

There could be a silver lining for VW in limiting Golf output. The automaker had already cancelled Golf production shifts on October 4-7 and Dec. 19-22 due to falling demand. VW said the stoppages were part of regular production adjustments.

“Given the slowdown of VW sales (excluding China), the brand certainly needs to slightly trim production levels,” said London-based Evercore ISI analyst Arndt Ellinghorst.


3rd Gear: The Supplier Who Told Volkswagen Where To Stick It

Meanwhile, Bloomberg has a profile on the Bosnian company who pushed back against VW, and they have an interesting story:

Prevent Group, a Sarajevo-based company, is controlled by one of Bosnia’s wealthiest families. While VW is known for using its purchasing power to push through cuts, Prevent was the first supplier to fight back by halting deliveries, puzzling industry observers as the two fight it out in court.

“It must have been something huge,” Nihad Imamovic, who began working with Prevent founder Nijaz Hastor during the company’s early days in postwar Bosnia-Herzegovina, said of the company’s moves. “Something terribly wrong must have been done to him.”


4th Gear: Delphi And Mobileye To Go Fully Autonomous By 2019

Two of the world’s most high-tech suppliers yesterday announced a joint venture to develop a fully autonomous driving system that they say will be ready in a little over two years. The machines are coming! Via The Detroit News:

Delphi Automotive PLC and Mobileye NV on Tuesday announced plans to jointly develop a fully autonomous vehicle system that the suppliers expect will be ready for production in 2019.

Each company is bringing different technologies to the table to create the driverless car system. Mobileye specializes in real-time mapping, while Delphi specializes in sensors, including cameras, LiDAR and radar, and software. The two companies say automakers will be able to buy the system and install it on a range of vehicle platforms, from small cars to SUVs and crossovers.

Delphi and Mobileye have planned a joint press conference for 9 a.m. Tuesday to discuss the plans.

“This partnership will allow us to give our customers an increased level of automated capabilities faster and more cost effective,” Kevin Clark, Delphi’s CEO, said in a statement. “The collective expertise of our two organizations will accelerate the creation of new approaches and capabilities that would likely not have been possible working alone. This is a win-win for both companies and our customers.”


5th Gear: ‘A Humbled Goliath’

One last Volkswagen post: Bloomberg points out how unusual it is for a supplier like Prevent to be able to hobble an automaker as gigantic as VW. But they can, easily. And it could happen again.

It doubtless attests to the German auto giant’s determination to slash costs at the VW brand, which has intensified as it tries to foot the bill for dieselgate. Still, it’s rare for such small fry to commit hara-kiri by refusing to deliver parts to an important customer. As such, the David versus Goliath battle does hint at a broader power shift between carmakers and their supply chains.

This particular supplier, Prevent Group, isn’t very high-tech but it’s notable nonetheless about how it could so easily disrupt production. If even a humble seat trim provider can inflict such pain, imagine what a bigger supplier could do.

And that goes to the heart of something that’s giving German autos execs, and their rivals elsewhere, a creeping feeling of angst: the sense that they may well become servants of their supply base. As carmakers expand internationally, the number of suppliers who can keep up is shrinking, making them more critical. Meanwhile, as cars become more like computers on wheels, suppliers contribute a far greater portion of the value added to the vehicle. They’re often more profitable than the auto-makers and valuations tend to reflect this.


Reverse: Tire Chains


Neutral: Is It Better To Buy A Nice Normal Car Than A Luxury Car?

I’ve driven quite a few BMWs in the $40,000 range with shockingly few options and frills. While most of them had outstanding driving dynamics, if you don’t care about that—or showing off how much cash you have—the case could be made for a loaded Ford Fusion or whatever for way less. This is a fairly new trend, at least on the level we’re seeing currently.


Ash78, voting early and often

Neutral: I could write a paper on this because I’ve been screaming about it for so long. Luxury used to mean the same thing it still means with heirlooms, like jewelry, furniture, etc: Something that is expensive, well built, and will last a long time and rarely (if ever) go out of style. But at some point about 20 years ago, companies started using technology to redefine “luxury” — they figured most people, especially the wealthy, were going to replace their cars ever 3-5 years, so the differentiator should be technology and safety gadgets. But this was inherently short-lived because of Moore’s Law and its cousins. I truly feel that companies like Mercedes (or even Acura) should try to focus on selling cars for about the same price, but make all the technology modular, and all the componentry higher quality. Offer a 10-year bumper to bumper warranty. Make the styling classic. Hell, you could even sell these under a sub-brand. In the long run, companies need more cars that will still be on the road in 30 years (but continue building most of their cars the way they already do). Some level of assured longevity will do wonders for their reputation over the decades.