[NINETY EIGHT REGENCY]

LUXURY'S NEW LOOK: Smaller and more practical
Dave Guilford
Automotive News -- February 8, 2010 - 12:01 am ET

Five years ago, you knew what a luxury vehicle was.

It might have been a Mercedes-Benz S600 with a V-12 under the hood. Or a Porsche Carrera S boasting 355 hp. Or a massive, bling-dripping Cadillac Escalade ESV Platinum.

Different as they were, those vehicles all displayed look-at-me styling, maximum horsepower and a sense of self-reward. Fuel economy was an afterthought. The overall rating on the Escalade, for instance, was 13 mpg.

But a deflated economy and rising green consciousness are changing the definition of luxury. In the new era of inconspicuous consumption, rational factors play a greater role in purchasing decisions, brand executives say.

Luxury brands need new selling points to bring hesitant buyers into showrooms -- and social correctness is a big factor. Johan de Nysschen, president of Audi of America, says sales of high-end luxury cars such as the Audi A8, BMW 7 series and Mercedes-Benz S class have been hit especially hard.

For example, sales of the Lexus LS fell 44 percent in 2009. The Mercedes S class dropped 37 percent. BMW's 7 series and Audi's A8/S8 also posted big declines.

"Those customers are the very people who are heading up corporations and small businesses, who are having to make tough decisions," de Nysschen says. "They might have the means, but it's just socially not the right time."


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