Luxury sales have steadily grown over the past three years due to the segment’s consistent owner loyalty and growing appeal among mass market vehicle owners, according to recent data from Jumpstart Media.
The luxury segment currently accounts for 13 percent of total sales, up 3 percent from 2014, shows the company’s latest auto shopper study in collaboration with Ipsos Connect, “Today’s Luxury Auto Owners: How Emotion, Experience, And Loyalty Drive Purchase Decisions.”
At 36 percent, a larger number of mass market owners say that they are interested in upgrading to a luxury vehicle.
Across Jumpstart sites, 34 percent of shoppers are researching luxury vehicles, up 4 percent from 2014, according to the company.
With the addition of more entry-level options offered at lower prices, a number of luxury brands have become more accessible to mass market owners in recent years, says Jumpstart senior web analyst Brian Miller.
“You’re seeing a lot more entry-level luxury options from traditional high-end brands such as BMW with its 1-Series, as well as Mercedes-Benz, Lexus and even Audi. Each of these brands realize the competitive forces being brought from mass-market producers and have focused significantly in competing for the entry-luxury shopper’s interest. I think the CLA-Class and A3 are the biggest examples,” Miller explained in an email interview with Auto Remarketing.
The amount of CPO options available today can be a draw for many of today’s mass market owners as well, according to Miller.
“The rise in luxury has certainly played a large role in the rise of CPO choices over the last few years. This, combined with the fact that a third of all vehicles have been leased in a very hot auto market now for several years, with luxury defining much of the leased market, means CPO has a lot of luxury choices today, and will for years to come,” he said.
Miller also acknowledges that maintenance costs associated with luxury vehicles can bring anxiety to both prospective and current owners.
The study found that 56 percent of mass market owners purchase a non-luxury car as their primary vehicle due to cost of ownership, and 41 percent of luxury owners spent more on maintenance than they expected.
“On average, maintenance cost in the past year has been two times greater among luxury owners versus mass market,” Miller said.
“The point here is that more so in the luxury market than the mainstream market, maintenance costs are a huge concern. It not only keeps people out of the segment, but is a huge pain point for those who currently own luxury. We heard in the qualitative that CPO helps bring peace of mind, so we do feel that the proliferation of CPO can be attributed to luxury.”
Because of price and value, Miller points out that non-luxury choices fitted with advanced technology and features have also appealed to consumers in recent years.
“The traditional luxury brands will always carry with them a healthy amount of fans due to brand loyalty. No doubt, these brands have worked hard over the years to build this loyalty, and the quality in their vehicles is among the most evident reasons why. That being said, there are a growing number of auto shoppers on the fringe that are just as interested in price and value, as much as they are interested in luxury features. This group will continue to explore choices produced by mass-market manufacturers.
When asked, “Which of the following attributes best describes luxury to you?,” nearly twice as many owners defined luxury as quality versus innovation.
Sixty-eight percent of luxury owners stated “quality”, while only 36 percent said “innovation.”
Among non-luxury owners, 93 percent listed “excellent quality” as a must-have for a luxury vehicle purchase, according to Jumpstart.
To capitalize on growing mass market interest in luxury, Miller said marketers should concentrate on promoting quality brand experience.
“Based on what we found in the latest joint report with Ipsos, auto marketers must focus on a quality brand experience in order to capture the interest and loyalty of today’s luxury shopper,” he said. “Gone are the days of retaining a customer just on brand alone.
“Marketers that successfully grow share in luxury will offer the right experience that includes service and maintenance options, and they will focus on demographics, cultures and age groups outside of yesterday’s perception of more established shoppers by age,” Miller continued.
Additionally, the study found that luxury owners are more likely to be self-employed, and 69 percent are likely to use their vehicles primarily for their personal business.
A large portion of luxury owners are younger today as well; 34 percent are between the ages of 25 and 34, according to the study.