The Democratization of Luxury, coming to a Mercedes-Benz dealer near you.

By Peter M. De Lorenzo

Detroit. You’ve probably heard of the term “democratization of technology” as it applies to this industry. It’s the idea that after new automotive technologies are developed and first applied by the various automakers to their racing machines, “show pony” supercars or super luxury cars, eventually that technology creeps down to models in lower-priced segments. This can be anything from electronics and safety gear, to suspension technology, tires, aerodynamic learning, engine performance and efficiency, with everything and anything in between.

The most obvious big-ticket engineering item at work today across all segments – especially in lower-priced models - is direct fuel injection. First developed over a century ago and then honed and developed further in subsequent years for piston-engine military aircraft, racing cars and high-performance street cars, the technology delivers impressive fuel-efficiency while at the same time producing prodigious power, most notably in smaller displacement engine applications.

It wasn’t all that long ago that direct fuel injection was strictly reserved for pure racing cars and exotic high-performance machines with stratospheric price tags. Now, the technology has become almost commonplace in lower-priced cars due to the onset and explosion of electronic engine control technology as applied to modern automobiles. This democratization of technology is likely to continue unabated, as new technologies are developed and applied across global automakers’ vast vehicle production portfolios.

But coming hard on the heels of that is a new concept that seems to be arriving at a breakneck pace but has heretofore remained unnamed - at least officially anyway – and that is the concept of the democratization of luxury.

This new notion that some luxury automakers are embracing suggests that luxury – or luxury themes as the case may be - can be transitioned into lower price points while still maintaining the image integrity of the participating brand.

Marketers of some luxury automotive brands truly believe that they’ve discovered the keys to a brave new automotive future with this initiative, one that states that the traditional notions of luxury not only have fallen by the wayside, but have become simply obsolete.

That this flies in the face of what luxury has meant throughout history in terms of it going hand in hand with the pinnacle of art, fashion, design, travel, lodging, etc., etc., and yes, even automobiles doesn’t seem to be stopping some of these marketers one bit, because they have talked themselves into believing that the “new” digital world we all live in has altered the global landscape so emphatically and unequivocally that all the old rules involving the concept of luxury and exclusivity when it comes to automobiles simply no longer apply.

There are no bigger proponents of this notion than Mercedes-Benz, with its new Mercedes-Benz CLA. With a base price just a few dollars under $30,000, this is the car that Daimler is pinning its hopes on, the Golden Calf on Wheels that will alter the company’s future once and for all. The CLA is a mildly interesting entry – though burdened with glaringly cheap details throughout - that Mercedes operatives insist will alter the course of automotive luxury as we know it, and the response to it has been uplifting – at least initially so - for the German automaker.

I’m using the word “initially” here because anyone who has been around this business long enough knows that an initial response to a new vehicle is clouded with “first-on-the-block” ownership syndrome and the one overriding principle that drives this consumer zombie society that we find ourselves in today: and that is that new is always better, no matter what. And when you join the idea of new is always better with the concept of getting your hands on it right now, well, then you have a veritable consumer nirvana on your hands. But what works for the Apple zealots who stand in line, zombie-like, for the latest product missive from Cupertino doesn’t necessarily apply to luxury automobiles. Not even close, as a matter of fact.

Let’s not forget that once upon a time, when it wasn’t so obsessed with being the all things to all people car company that it is today, Mercedes-Benz was considered to be a maker of exclusive luxury cars. That was back in the day of the imperious - and perfectly rendered - ad theme “Engineered Like No Other Car in the World,” which came with the belief that driving a Mercedes was truly something special and was coveted by the well-heeled who could actually afford one and the rest of us with aspirations of wheeling that level of luxury some day.

But, as is their wont, Mercedes lost its mojo when it decided to become more approachable in this market. This was because certain “visionary” (and woefully misguided) Mercedes marketers at the time believed that the brand’s imperious image wasn’t going to be enough to sustain the brand over the long term.

That this was code for the fact that Daimler was in danger of crumbling under the weight of its relentlessly clueless management is well documented. Led by one of the most maliciously incompetent auto executives of all time, Jurgen E. Schrempp - the CEO who paid $36 billion for Chrysler only to watch it evaporate in less than eight years – the company faced the burgeoning reality of not being able to sustain itself in the shark-infested waters of the new global automotive environment.

But that was a moot point because the real reason behind Daimler’s push to make Mercedes-Benz more approachable was desperation. The company needed more cars in more segments in order to generate more money because its famously inbred corporate culture was going through cash like water, and the hoary Mercedes-Benz “way” wasn’t cutting it in the face of ruthless and much savvier competition, from its competitors within Germany and from the luxury upstarts in Asia. (It was no secret that Daimler’s “way” was shockingly similar to the moribund ways of the bad old GM in some respects, which needless to say was a giant bier stein of Not Good.)

That Mercedes then proceeded to shoot itself in the head in this market with one product misstep after another (C230 Kompressor, anyone?) while foisting glitch-ridden electronic driver interface systems on its loyal customers that left them furious, confused and eventually wandering off to check out the competition, was just icing on the proverbial cake.

But this is a new day, isn’t? At least it’s supposed to be anyway. Yet here we have Daimler reverting to its old “Jekyll & Hyde” tendencies in this market, meaning, on the one hand they can create the new – and beautifully executed - S-Class, and on the other they can talk themselves into believing that they can rewrite history and change human nature all in one fell swoop with the new CLA.

Well, this just in: They can’t. And they won’t.

The Mercedes-Benz USA brain trust led by Steve Cannon earnestly believes that the buyers being lured in by the enticingly low sticker price of the CLA will stick with the brand and eventually become Mercedes customers for life. Ah, that indeed is a wonderfully naïve thought, but one that’s nonsensical in this brand-diluted world we live in today.

The first thing the CLA will do for the brand – besides lure first-on-the-block hipsters to Mercedes showrooms who will prove to have the brand loyalty of gnats on caffeine – is cannibalize from its own C-Class offerings.

Remember, most of the buyers being lured into Mercedes-Benz showrooms by the CLA are new to the brand, which Mercedes executives insist is a very good thing. And normally that is a good thing, or at least it should be, except for the fact that these consumers aren’t coming to Mercedes because of its reputation for building great cars, they’re coming to the brand because they think they are getting a deal on a Mercedes. Or at least a close enough facsimile to one to make it worth the time, money and their already challenged attention spans.

What does that mean? It means that all of the marketing money Mercedes-Benz USA is pouring into the launch of the CLA will prove to be a boon to selling the CLA – at least initially (there’s that word again) – but the volume increase that Cannon & Co. are so absolutely sure is coming will not materialize.

Other brands have made forays into lower-priced segments, but they’ve done it with an intelligence that seems to be lost on Mercedes-Benz marketers.

Take BMW for instance, they knew an “entry level” BMW would cheapen the brand and destroy years of a consistent marketing effort that skillfully seeded “The Ultimate Driving Machine” in the American consumer consciousness. BMW’s solution? Resurrecting the Mini brand, which has proved to be a success any way you look at it.

Or look how Audi is handling its new A3. Expertly executed to the Audi brand promise, the A3 doesn’t scream and shout for attention and it doesn’t pretend to be the hipper-than-thou Audi for hipper-than-thou hipsters who ordinarily wouldn’t have anything to do with the brand. Audi is secure enough in its brand image to create a proper Audi that happens to be at a lower price point, not a cartoonish Audi that disavows any resemblance to its stablemates.

Or consider Porsche. Even though this brand has moved into some glaringly alternative segments to its core sports cars, to put it mildly, the company has made a commitment to at least bring something special or something only Porsche would do to each and every segment it competes in. And none of these new Porsches could ever be described as being cheap.

The Mercedes-Benz CLA does none of that. In one fell swoop Mercedes has brought itself within range of the Hyundais and KIAs of the world, and if I were a betting man, I wouldn’t take odds on Mercedes rising above the fray for long.

That the Mercedes-Benz marketing strategy with the CLA seems to hinge on the idea of disavowing anything to do with what has come before is obvious. It’s as if Mercedes marketers are saying there was something wrong with brand integrity, substance, mystique and the idea that there was a proper way to build great road cars, and the fact that Mercedes-Benz had pioneered it long before most car companies now in the game had even thought about it.

I find the marketing strategy for the CLA to be an excruciatingly cynical take on this business. The notion that you can throw that three-pointed star on anything and the people will come is ludicrous. And it is fueled by the fundamentally flawed belief that by luring “younger” buyers to the brand at all costs, the Mercedes-Benz brand reputation will somehow survive intact and the ensuing volume increase and profits made will cure all ills associated with any brand deterioration.

But lost in that skewed logic is the fact that by doing so, Mercedes-Benz will have successfully removed any last vestiges of “specialness” still clinging to the brand.

Look at any of the prestigious luxury fashion houses that experimented with becoming more approachable over the last two decades by adding stores, covering segments of the market they had no business being in and generally dumbing down their brands, and I assure you they would all say the same thing: It was a fool’s errand that cost them customers, cost them dearly in the market and set their brand images back years.

There is a reason that the great luxury brands hold their images in high regard and guard them vigilantly from overexposure or from cheapening them in any way. They’ve come to understand that luxury not only means exclusivity, it means holding yourselves to a higher standard in order to protect the specialness of the brand, even though it may in fact mean making less of something.

It’s true that the people may come – at least initially – to check out the CLA or even buy it, but Mercedes executives are destined to find out the hard way that the whim that brought those people into the showrooms will whisk them away just as easily.

By pushing this once-hallowed automotive brand down market – instead of projecting it into even higher price points to reinforce the integrity of the brand - Mercedes-Benz marketers aren’t ensuring that new, younger buyers will embrace the brand and power it to success in the coming years, they’re doing exactly the opposite.

Mercedes marketers have adopted a strategy that takes dead aim at mediocrity, one that suggests that “good enough” is good enough as far as they’re concerned and that any specialness and desirability of the brand over the long run is simply irrelevant.

The logical conclusion to all of this does not bode well for Mercedes. By choosing this path they are all but guaranteeing that their competitors will be emboldened to accelerate their plans to topple this once-impenetrable brand.

After all, the leap up to Mercedes’ level in the market just became a whole lot easier.

The democratization of luxury, indeed.

And that’s the High-Octane Truth for this week.