Luxury automakers, including giants like Mercedes-Benz, Audi, BMW, Porsche, and Bentley, are facing significant challenges. Declining demand, especially in key markets like China, has led to concerning results in recent earnings reports.
The central question is why these conditions are so difficult. The uncomfortable truth is many brands, despite marketing themselves as luxury, fail to provide a true luxury experience. These brands are, in reality, “luxury in ambition only.” They offer well-packaged versions of the ordinary.
Over the past few years, price increases have far exceeded the improvement in client experience. This disconnect arises from the industry’s engineering-focused mindset. The automotive industry has long celebrated technological advancements, but luxury transcends precision engineering; it is fundamentally about fostering emotional connections and building lasting client relationships.
Luxury is perceived through experiences that leave clients feeling valued, understood, and ultimately, loyal. It’s in this area that luxury car brands frequently disappoint. Chinese consumers, who are critical to global luxury growth, have exceptionally high expectations. They demand not just a product, but an elevated, seamless experience. Unlike other markets, Chinese buyers aren’t willing to compromise on this.
Research suggests many brands remain overly product-focused, emphasizing features and performance over brand experience and storytelling. This transactional approach alienates discerning Chinese clients who value exclusivity and a deep connection to the brand narrative. To succeed, brands need a complete rethinking of their strategy.
Nio, a Chinese brand, has successfully reinvented the client experience with its Nio Houses, which serve as cultural spaces, going beyond simple sales transactions. Porsche’s newly imagined Porsche Studios offer a comparable experience. However, this approach lacks the necessary global reach.
As client expectations rapidly change, this is a critical moment for the luxury car industry. Complacency and blaming external factors are not options. The problems are internal.
Dealerships: A Bottleneck in Luxury Experience
A major challenge is the dealership model itself. From Mercedes to Bentley, the client’s experience in sales, service, and aftercare can be remarkably similar. High-end brands should offer personalized, seamless, and attentive experiences that set them apart through their distinct stories and emotions. Instead, the current dealership model often creates a ‘sea of sameness,’ prioritizing sales transactions over meaningful client relationships.
While customer service at the point of sale is often robust, it often deteriorates during ownership. After-sales service, in particular, may be underwhelming. Clients frequently face long wait times, limited communication, and a disconnect between their expectations and the service received.
Mystery shopper exercises typically reveal luxury car salespeople more focused on specifications, test drives, quick deals, and upselling, rather than building rapport with the client. This emphasis on transactions contradicts the core of what luxury should represent.
Disappointment at Every Turn
My personal car shopping experience underscores this point. For the last eighteen months, I’ve been waiting for a Porsche 911 GTS Targa from my local dealership, with no information on allocations or wait times. The sales team even discouraged me, suggesting I buy a convertible – a model I already own. This experience is not luxurious.
Since buying my 911 convertible, many aspects of the dealership interaction have been disappointing. On one occasion, when the convertible roof malfunctioned before a trip, I drove to the dealer and was told the next available appointment was three weeks away. The actual repair took only minutes. There was a recent instance where my wife was interested in buying a BMW X5. After a test drive, the salesperson didn’t follow through with a promised quote. This is appalling. As a customer, why should I care about a brand if its staff clearly don’t care about me?
The Solution? Transformative Training
What would it take for luxury automotive brands to truly embody luxury?
Training is an obvious answer, but not the superficial training that most brands use. Training focused solely on repeating client names or product scripts is insufficient. Luxury training must be transformative, changing the approach to client interactions and fostering a deeper understanding of luxury beyond the product. Sales teams need to understand the psychology of luxury purchases, especially why clients pay a premium.
Integrating storytelling into the sales journey is essential, with every interaction an opportunity to engage clients with the brand’s legacy and vision. Training should also emphasize teamwork.
Given the significant issues within the dealership experience, training must also include headquarters employees and leadership teams. Systemic problems can’t be fixed on the sales floor. The essential question for every brand to ask is: how can our experience be different than our competitors?
Training should also be ongoing, allowing teams to continuously refine interactions. A phased approach over months ensures employees truly grasp the nuances of luxury, and consistently apply these insights.
Redefining the Future of Luxury Cars
Luxury is ultimately about feeling, not engineering. With intensifying competition and high client expectations, brands that refuse to adapt risk declining sales and brand equity. What brands currently experience in China could become a global warning if rapid changes don’t occur.
The inability to create luxury experiences at scale is the automotive industry’s major weakness, alongside the transition to electric cars. It’s time to deliver true luxury, beyond mere ambition. The clock is ticking.
This is an opinion piece by Daniel Langer, CEO of Équité and a recognized luxury expert.
