NEW YORK - Ford Motor Company’s Executive Vice President of Global Marketing, Sales and Service and Lincoln Jim Farley earlier today delivered the New York Auto Show Opening Press Breakfast Keynote address at the Javits Center. To view video of the keynote, click here.
Recently, Employee Communications had the opportunity to discuss some of the themes of Farley’s planned keynote speech. Below are excerpts from that conversation.
Q. How has the Great Recession affected the luxury automobile market?
A. The luxury car business is stabilizing and consumer optimism is on the upswing. We feel confident that we know how the Great Recession has changed the business, but there are bigger changes in sight that nobody seems to be talking about. Several trends are emerging that will soon transform our business once again and they are all being driven by customers who are changing the universe around us whether we are ready for it or not.
Q. What type of trends are you referring to?
A. Luxury used to be about size, price and lack of attainability. However the recession has helped change that. Today’s consumers don’t necessarily believe luxury needs to come with such a high price tag. In fact, research shows that the majority of them expect to pay less than $60,000 for a luxury sedan. What they are looking for is luxury-level quality, performance and features in a smaller package.
Q. How are Millennials influencing the luxury car market?
A. The trends that we’re seeing in the luxury car market are part of a larger economic shift that’s bringing new faces and preferences into the marketplace. We all know that Baby Boomers drive our industry in the U.S., and they’ll continue to do so for some time. However, Millennials are one group that could surprise us. They have a sense of entitlement. They are discerning and they have high expectations. They want a luxury vehicle that demonstrates prestige and gets them noticed on the road. With prices dropping, their first or second vehicle could very well be a luxury car.
Q. What kind of opportunity do we have with Hispanic consumers?
A. Hispanics are the fastest growing population in the U.S. They are also becoming more affluent. There has been a 126 percent increase in U.S. Hispanic households making more than $100,000 a year and as a group, U.S. Hispanics hold a total net worth of $500 billion. These consumers are also buying luxury automobiles at a faster rate than the overall market. Luxury registrations for Hispanic customers were up 53 percent between 2002 and 2006 versus non-Hispanic registrations at only 13 percent. We have a huge opportunity to reach out to this audience with the Lincoln brand, which is more compelling, interesting and relevant than ever.
Q. How significant are women in today’s global car market?
A. Women are at the center of the most compelling trend of all. Throughout the world, rapid urbanization is drawing women to cities where they are trading agricultural work for careers in business. Here in the U.S., female buyers are outpacing males for the first time. What this means is that one billion women will be entering middle class globally by 2020 and many will be buying vehicles for the first time.
There is a huge potential for these new female buyers to drive luxury growth in developing areas of the world, such as Brazil, India, China, Russia and Turkey. In China alone, women now contribute about half of household income. That’s up from 20 percent in the 1950s. Their educational opportunities have grown considerably, and they’ve entered the white collar workforce.
Women could change the way we develop and sell our products. Their practical preferences for quality, value and safety may reshuffle global product development priorities. For example, globally, women tend to order standard powertrains and wheels and upgrade safety, communication and navigation features. Women will also drive dramatic changes to the retail experience in markets because in certain markets around the world they are unhappy with the dealership experience.
Q. Has consumer focus on fuel economy changed since the recession?
A. That is perhaps the greatest cross-demographic shift we’ve seen since the recession. Fuel economy is now the top consideration for vehicle purchases, and it has resulted in a flood of claims and data that is starting to overwhelm the market. We now have a torrent of “best-in-class” claims hitting consumers from all sides, and it’s starting to become noise. We are seeing more and more confusion as consumers try to make informed decisions. Given the connectivity in our cars and the proliferation of mobile devices, we now have the opportunity to give consumers better and more relevant data to understand what they can expect in on-the-road fuel-economy performance.
Q. How are mobile phones changing the experience we have in our vehicles?
A. We are seeing a shift in the way customers consume and use information, and a lot of that is driven by the mobile experience. Mobile growth continues to explode all over the world and it is already a huge part of our daily lives. The mobile experience is particularly important to Millennials – who expect the latest technology and seamless connectivity – and women – who are passionate about staying constantly connected to friends and family. All of this is having a profound impact on marketing, sales and service experiences.