brand differentiation and competitive pressures to ...316...future of the global luxury vehicle...
TRANSCRIPT
Future of the Global Luxury Vehicle Market
M975-18
June 2014
Brand Differentiation and Competitive Pressures to Revolutionize the
Luxury Vehicle Market by 2020
6 M975-18
Executive Summary—Key Findings
1 In an increasingly competitive space, OEMs are exploring new means of differentiating their brand,
and the study finds that new brand attributes and positioning will propel the market.
2
To expand market share and improve profitability, traditional mass-market brands (e.g., Hyundai,
Ford, and Fiat) are attempting to expand their portfolio with the launch of premium models, such as
the Genesis, the C6, Avantime, and Ford’s upcoming Vignale brand. Chinese brands are to follow.
3
Size is no longer one of the key definitions of a luxury vehicle. There is a growing market for smaller,
fuel-efficient luxury cars. The compact segment is expected to be one of the fastest-growing luxury
car segments, growing by 70% to reach close to 3 million sales globally by 2020.
• To build sustained brand loyalty, luxury OEMs are targeting Gen X and Y with more compact,
sustainable, high-tech cars; for example, Mercedes CLA, Audi A3, BMW 1 series.
• The premium suburban utility vehicle (SUV) and crossover market is one of the hottest
segments, accounting for approximately 23% of global luxury sales.
4
Connectivity and autonomous driving are evolving into key parameters by which a brand will be
judged in the future. The race is on to launch the first fully automated car, which is expected to hit the
market by 2020.
5
The advent of eRetailling and digital technology has spurred the evolution of market channel
strategy of luxury OEMs from the traditional brick-and-mortar showroom to a more sophisticated,
digitally enhanced brand experience.
6 In 2013, China overtook the United States to become the largest market for luxury vehicles. By 2020,
China’s share of the global market is expected to grow to nearly 30%.
Source: Frost & Sullivan
Growth of luxury vehicle sales is set to outpace growth of the mass-market vehicle sales, with luxury expected
to account for 10% of the global automotive market by 2020.
7 M975-18
Key Mega Trends that will Impact the Luxury Vehicle Market
Big Data Smart
Mobility
Connected
Living and
Connected
Car
Growth of
HNWIs
Health and
Wellness
Future of
Mobility*
Women
Empowerment,
Gen Y
Bricks and
Clicks*
While all Mega Trends are important, the selection and ranking of these trends indicate which seismic shifts will
have particular relevance in shaping the landscape of the global luxury vehicle market.
Impact on the Luxury Vehicle Market Measured based on most impact on future products and services capabilities, resulting in new convergent and radical devices
Minor Conservative Radical
Gro
wth
Att
rac
tive
nes
s
Assessed b
ased o
n m
ark
et attra
ctiveness in t
erm
s o
f re
venue
Hig
h
Lo
w
*Social trends, bricks and clicks, future of mobility, and connectivity have been independently featured in demographic analysis, future
retailing, future of mobility ,and technology sections, respectively. HNWI stands for high net worth individuals.
Luxury Vehicle Market: Mega Trends, Global, 2010–2025
Source: Frost & Sullivan
8 M975-18
Luxury OEM Types of the Future
High Sales Volume* Mid Sales Volume* Low Sales Volume*
BMW
Mini
Rolls Royce
Mercedes
Alfa Romeo Hongqi
Ferrari
Maserati
Lincoln
Volvo
Cadillac
McLaren
Acura
Hyundai
Genesis
Aston Martin
Lotus Infiniti
Jaguar Land Rover
Tesla
Lexus
Audi
Bentley
Lamborghini
Porsche
Volkswagen
Phaeton
*Sales volume within the luxury segment. Mass-market brands with premium models have been included; for example, Toyota’s Century, Volkswagen Phaeton.
Ferr
Asto
Be
Ja
Au
BM
AudiAu
guar
Romeo
Ac
Li
MaLotutututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututututussss
Lamb
HoHoHoHoHoHoHoHoHo
Vo
Sports and Super Luxury
Market Leaders
ac
Affordable Luxury and Near Premium
Luxury Vehicle Market: Classification of OEMs, Global, 2013
Source: Frost & Sullivan
9 M975-18
How Luxury Cars will be Defined in the Future
New Luxury
Definitions Factors That Determine Luxury
Early Examples That Set
the Trend
Urban Luxury Cars designed for an urban driving environment to
deal with pressures of congestion and parking
BMW i3 and BMW i8 (Mega
city) luxury cars
Sustainable and
Green Luxury
Brands focused on alternative powertrains and
lower CO2 emissions Tesla Model S
Women
Empowerment Brand and vehicle model differentiated for women Acura MDX and Volvo V40
Individual Luxury Increased customization and limited-edition cars Rolls Royce Wraith and
Bentley Continental
Smart Luxury
Smart features in cars, such as increased
connectivity, advanced human machine interface
(HMI), and haptics that are intuitive.
Audi A8 and BMW 7 Series
Luxury Vehicle Market: Future Definitions of Luxury, Global, 2010–2025
Source: Frost & Sullivan
10 M975-18
Design and
Styling Driving
Dynamics
Safety Sustainability and
Environment
Automated
Mobility
Quality and
Reliability
Comfort and
Convenience
Cost of
Ownership Connected
Mobility
Health,
Wellness,
and Well-being
y yDynamics
CComffortt andd
Pre-2000 Today Future
Luxury Vehicle Market: Future Brand Differentiators, Global, 2010–2025
Source: Frost & Sullivan
How OEMs will Differentiate their Brand in the Future Focus will shift to connected mobility; automated mobility; and health, wellness, and well-being.
11 M975-18
Luxury Vehicle Market: Branding and Comparative Analysis of Brand Values, Global, 2013–2020
Quality
Environment
Innovation
Performance
Proud to own
Fun to drive
Safety
Prestige
Attractiveness
Elegance
Advanced
Smart
Conservative
Style
Dynamism
Excellence
Delight
Design
Well-being
Serenity
Functional
Original
Audi
Emotional Functional
Stylish, classy, discrete elegance, sporty,
progressive, “sober” design, solid, safe,
very well built, reliable, German origin
Sporty
Mercedes-Benz
Prestige, elegance, stylish, exclusive, smart
interior, high class
BMW
Prestige, engineering excellence, precision,
technically superior, sporty, dynamic,
smooth engine running, agility
Infiniti
Sporty, quiet, bold, aggressive, edgy,
stunning, attractive, less formal, performance,
dedicated, yet with a difference
Acura
Attractive, smart, advance, cool, safe, excellent,
quality, performance, efficient, health, cost of
ownership, appropriate, sleek, early adopter Efficient
Lexus
Conservative, functional, elegant, effective,
pride of ownership, consistent, clear, credible,
eco-friendly
Note: The list of OEMs is not exhaustive.
Branding Comparative Analysis of the Luxury Brand Values Brand values are segmented into functional and emotional categories. The future might see an emphasis—from
OEMs—on enriching the emotional values to build barriers to entry.
Source: Frost & Sullivan
12 M975-18
Connectivity
Customization
HMI
Buying experience
Ride and handling
Green
mobility
Interior
appeal
Size and interior space
Apps/Internet/
network
Enhanced
safety
Autonomous
driving
Ownership
experience
Health/
wellness
features
Infotainment
Body style and design
vCommerce
Security
and access Personalization
and smoothness
of drive
Luxury Vehicle Market: Customer Value Set, Global, 2025
Cost of
ownership
Body style and design, interior appeal, size
and interior space, ownership experience,
autonomous driving, health/wellness, and
buying experience
Gen Y—Inherited Wealth
Interior Appeal, personalization and
smoothness of drive, customization, HMI,
connectivity, vCommerce, and apps
Gen Y—New Money
Body style and design, ride and handling, cost of
ownership, green mobility, vCommerce, apps,
and infotainment
Baby Boomers
Body style and design, size and interior space,
enhanced safety, ownership experience,
autonomous driving, health/wellness, and
buying experience
Women
Body style and design, size and interior space,
security and access, enhanced safety, HMI,
green mobility, and autonomous driving
Interior appeal, size and interior space,
security and access, customization, HMI, and
infotainment
Gen X—Inherited Wealth
Gen X—New Money
Source: Frost & Sullivan
Attractive Attributes for the Future Luxury Customers Customer preference for traditional (hard) and future (soft) attributes is likely to influence the brand’s positioning
and the target demographic.
13 M975-18
• Baby boomers' buying
preferences have shifted as
their lifestyles have
changed.
• Mercedes and BMW are
brands preferred by this
demographic. Other popular
brands are Jaguar, Porsche,
Volvo, and Lexus.
• Luxury spending is
increasingly becoming the
domain of millennials.
• Millennials tend to buy a new
car when they have a change
in lifestyle or financial status.
• They value connectivity and
view their cars as an
extension of their digital and
social media lifestyles.
• Safety, reliability, and quality
are key considerations for
women.
• Women are 67% more likely
to prefer the crossover body
style when compared to
men.
Baby Boomers1 Millennials2
Women
1Baby Boomer: Born between 1946 and 1964 2 Millennial: Born between 1977 and 1996
Source: Frost & Sullivan
Future Luxury Customers Luxury OEMs are set to target three major demographic segments.
14 M975-18
OEM 1
OEM 2
OEM 3
OEM 4
Brand A
Brand B
Brand C
Brand D
Brand E
Brand F
Brand G
Brand H
Authorized
Dealer
Authorized
Dealer
Authorized
Dealer
Authorized
Dealer
Horizontally aligned, authorized dealer networks and last-
mile deliveries with no vertical synergies
OEM
Warehouse
OEM
Warehouse
OEM
Warehouse
Current (2013)
OEM 1
OEM 2
OEM 3
OEM 4
Brand A
Brand B
Brand C
Brand D
Brand E
Brand F
Brand G
Brand H
Vertically aligned retail networks with synergies between retail
formats
Suburban
Areas Online Stores
OEM
Warehouse
City
Center Suburban
Areas
City
Outskirts
Big Box
Multibrand
Dealer
Big Box
Multibrand
Dealer
Authorized
Dealers
Small
Virtual
Stores
Experience
Flagship
Stores
Future (2020)
OEM
Warehouse
Cu
sto
mer
Cu
sto
mer
Global Vehicle Market: Smart Future Retail Network, Global, 2013–2020
Source: Frost & Sullivan
The Smart Future Retail Network The development of vertically aligned retail networks will lead to synergies between retail formats, with a luxury
retail outlet in the heart of the city transforming into a strategic pillar.
15 M975-18
Digital Displays
(three-dimensional (3-D) visuals, holographic projections)
Interactive Rooms—VIP Customer
Lounge
(3-D configurator, projection system)
Digital Tools
(tablets, 3-D glasses configurators,
robotics)
Interactive Media
(gamification, augmented reality)
Digital Staff
(technical experts, product geniuses)
• Presentation of information in visual and virtual form within a showroom;
placed above the entrance area, showroom windows, and/or media wall
• Automotive showrooms equipped with gamification to improve user
engagement, data quality, timeliness, and learning
• Augmented reality included to experience a vehicle in simulated conditions,
explore, and test model features
• Relationship managers and product experts who advise and educate
customers with the aid of digital tools
• Direct online customers through digital tools to acquire pertinent information
on models, equipment, and color
• Digital, mobile, and interactive tools to engage customers with the product,
enabling exploration of an unlimited number of model ranges or
configurations
• High-tech dedicated lounges used to communicate with customers
• Lead to next level of engagement, i.e., retailing perspective (finance,
insurance)
Interactive and
Seamless
Experience-
based Consultative
Source: Frost & Sullivan
Key Components of the 2020 Luxury Automotive Store Luxury automotive retailers are anticipated to employ an array of technologies and sales techniques to ensure
the highest brand engagement and a highly personalized customer consultation.
16 M975-18
Future Omni Channel Retail Stores To Be More Experience-based Than
Transactional
High Degree of Brand Immersion Low
Deg
ree
of
Dig
itiz
ati
on
H
igh
L
ow
3-D car configurators
Brand studios
Brand theaters
Small Pop-up Stores Virtual Stores (within
Stores)
Mega Flagship Stores
Genius bars
Virtual test drives
Digital configurators
Digital kiosks
Digital display
AR-based information
overlay
Online browsing
Virtual posters
• Use of 3-D, gamification, and high-
resolution display
• Emphasis on relaying brand
philosophy
• Ideal for city centers
• Display of physical inventory
• Higher use of gesture-based
technologies
• Emphasis on creating a brand
experience
• Ideal for city centers
• No physical inventory
• Mobile apps-based technology
• Emphasis on relaying brand
information
• Ideal for urban and rural areas
• No physical inventory
Brand Information Brand Experience Brand Lifestyle
Virtual Stores (Within Stores)
Omni channel retail stores are not likely to be transactional. The highest degree of brand immersion is
experience-based high-end flagship stores that convey product information through sophisticated in-store
digital solutions
Source: Frost & Sullivan
17 M975-18
Customer visits an
OEM/dealer Web site to look
for the new car launched or
to browse existing models.
1
The technology works on
multiple car configurations.
2 3
A QR code is generated
based on the configuration.
4
QR code gets converted to a
virtual showroom in a car
dealership.
Sales representative
receives customer
experience report and is
advised on the next steps.
OEM manager receives data and
information from customers around
the globe and gains the ability to plan
targeted marketing campaigns and to
offer feedback directly to the product
development teams.
5 6
Image Source: IBM, Zerolight, JaguarLandrover.co.uk
Source: Frost & Sullivan
Increasing Investment in Data Mining and Data Analytics Luxury OEMs are investing in data mining and data analytics to provide the highest level of customer service
and personalization and to enable a seamless transition from the online to the offline customer experience.
18 M975-18
Connectivity—HMI and
Personalization Comfort and Convenience
Connected Mobility
Autonomous Driving
• Touchpad with
handwriting recognition
and gesture controls
• Capacitive touchscreens
• Touch screens with
haptic feedback
• Apps or in-vehicle
features to monitor air
pollen levels and blood
sugar levels
• Driving dynamics
personalization
• NFC-based interior
personalization (through
phone)
• Active ventilated front seats
and massage
• Interior lighting (mood lighting)
• Laser or organic light-emitting
diode (OLED)_ headlights
• Long-term Evolution (LTE)
and over-the-air integration
• Wireless charging
• Vehicle-to-Vehicle (V2V) and
Vehicle-to-Infrastructure (V2I)
communication
• Integration with wearable
personal devices
• Map-enabled Automated
Driver Assisted Systems
(ADAS), including
powertrain and
suspension control
• Collision warning and
mitigation using AR
• Low-speed collision
avoidance and
emergency braking
• Powertrain automation
• Top view assist, park
assist, rearview camera
• Autonomous Cruise
Control (ACC) with traffic
jam assist
Luxury Vehicle Market: Future Differentiators, Global, 2013–2020
Source: Frost & Sullivan
Luxury Vehicles—Future Differentiating Technologies Features, such as ride and handling and convenience features, are prioritized, followed by active safety,
peripheral integration, input HMI controls, and interior features and vehicle personalization key.
19 M975-18
Connected
Services Apps
Telematics
Services HMI
Remote
Convenience
Key
Features
• Dynamic
navigation/
Google Earth or
picture
navigation
• Live traffic
services
• Parking
reservation and
payment
• POI services,
Google search,
other real-time
services
• Eco-driving apps
• Social
networking apps
• Location-based
services—geo-
social networking,
food guides,
charging station
locators, etc.
• Entertainment
apps—Internet
radio, on-
demand radio,
news radio
• Mobility—car
rental
• Emergency or
breakdown
services
• Vehicle tracking
services
• Proactive
diagnostics
alerts
• Condition-
based service
scheduling
• Over-the-air
updates
• Concierge
services
• 8- to 17-inch displays Wide Video Graphics Array (WVGA)
• 800*480 to 1280*480 to 1280*600 pixels
• Dual-view displays
• 3-D graphics
• Haptic rotary controller
• Personal digital assistant
• Natural speech recognition
• Integrated Circuit (IC) display
• Remote vehicle
communication—
locking or
unlocking
• Status check and
battery range
• Activating or
planning charging
cycles
• Parked vehicle
location finder
• Diagnostics
information check
• Interior settings—
seat, lights
Key
Takeaway
Navigation is a
commodity—smart
parking-type
services are crucial
to integrate.
Balancing number
of apps with right
type of apps is
critical—BMW is
leader here.
Long-term customer
interaction is crucial
from after-sales
angle—BMW tele-
service.
12-inch-plus
screens are
becoming a norm
with Tesla, 2014 S
Class with high PPI.
It is crucial,
especially for
electric vehicles (EV)
or hybrid owners, to
ease range anxiety
factor.
Source: Frost & Sullivan
Connected Car Feature Portfolio of Luxury OEMs Connected services, apps, and HMI innovations are the crucial areas where luxury OEMs are investing a lot of
time and effort.
20 M975-18
OEM
Automation
Level
Launch
Year First Models
Top-level Functions
Region of Introduction TJA1 APA2 AHD3
BMW Semi–
Highly
2014
2017
X5
5-/7-series Europe and North America
Mercedes-Benz Semi–
Highly
2014
2017
E-Class
S-Class Europe, North America, Australia
Audi Semi–
Highly 2016 A8 Europe and North America
Cadillac Semi–
Highly
2018
>2020
SRX,
ATS, XTS North America
Lexus Highly 2020 LS Japan, Europe, North America
Infiniti Highly 2020 Q50 Japan, Europe, North America
Volvo Semi 2015 XC90 Europe and North America
Automated Driving Market: OEM Comparative Analysis, Europe and North America, 2014–2020
1Traffic Jam Assist
2 Automated Park Assist
3 Automated Highway Driving
Source: MIRA Ltd; Frost & Sullivan
OEM Comparative Analysis—Automated Driving Rollout Strategy High-volume premium OEMs, typically thought leaders, are ahead of the curve in launching applications with
3-fold benefits to mitigate frustration and monotony in traffic jams, in parking lots, and on highways.