The world’s largest auto market since 2010, China will surpass the US to become the world’s largest premium car market by 2020. Having entered China when the country had no luxury auto segment to speak of, European luxury automakers Audi, BMW, and Mercedes-Benz continue to occupy 80 percent of high-end market share in China, posing a continued challenge for global players like Lexus, Infiniti, and Cadillac.
As an already crowded premium auto landscape becomes increasingly competitive — and homegrown players maintain protracted efforts to go upmarket — what should automakers do to appeal to China’s evolving luxury auto shopper?
First is to note the changing motivations behind a luxury auto purchase in China. Exogenous factors like conspicuous consumption, status and prestige, the primary drivers of auto sales in the 1990s and first decade of the 2000s, have increasingly morphed into private self-indulgence — seeing one’s vehicle as a symbol for credibility and a reflection of a particular lifestyle. Now, more than ever, Chinese luxury auto buyers demand innovative functions and designs and top-notch after-sales service to increase their personal enjoyment of their automobiles — just like their international counterparts.
These shifting sands present an opportunity for American, Japanese, and British marques to chip away at the market share of the German “big three” — which can no longer depend on their strong brand recognition alone to dominate China.
One such case of tackling the market with a distinct angle is the current China “debut” of American brand Lincoln, which is set to open its first three dealerships in China after decades away from the market. Having meticulously planned its China relaunch over the past two years, Lincoln has taken great pains to introduce itself to China as an understated luxury — a marque that doesn’t scream for attention, but gets it anyway through design, service, and heritage. Rather than taking a page from Coach’s playbook and leaning heavily on American iconography to move units in China, Lincoln exchanges its Matthew McConaughey-heavy US campaign for one highlighting Chinese artists like dancer Huang Doudou and pianist Li Yang. Filmed in Shanghai, Hangzhou, Guangzhou, and Qingdao, Lincoln’s China ad campaign is an overt attempt to link the brand with craftsmanship, elegance, inspiration, and artistry in the minds of Chinese consumers — casting Lincoln as the sophisticated, cultured alternative to Audi’s “cadre-mobile” or the tricked-out tuhao Mercedes.
Lincoln’s China re-entry strategy indicates that the brand hopes to not only establish strong brand awareness, but differentiate itself by promoting the entire Lincoln-buying experience as a luxury in itself. This concept comes across in the initial ad campaign, which hints that buying a Lincoln offers a dealership and purchase experience unlike any other in China. Said Darren Crawforth of OgilvyOne Shanghai of the campaign, ““There isn’t a salesman waving around a clipboard looking for the hard sell…This is a heritage brand expressed with a sense of modern luxury, and buying a Lincoln is all about the experience of the journey.” Considering word of mouth is the leading motivator of purchase decisions for Chinese consumers, if Lincoln can deliver on the promise of an unparalleled dealership experience and get people talking, the marque could see bright prospects in China.
For other players in the space — and other luxury brands facing a tougher mainland China sales environment — Lincoln’s re-introduction in China will be a critical case study. If Lincoln can balance its American history and heritage with Chinese cultural touchpoints that nod to the culture but don’t pander, it could carve out a niche among an increasingly important but often ignored demographic — the “silent affluent,” those understated urban dwellers who have owned a few European luxury cars, might have impressive art or wine collections, are worldly and well-traveled, and are ready for something new.