J.D. Power Concludes Premium Brands Need a New Reason for Being
“Premium brands are being squeezed from several directions. First, they must compete with mainstream products that increasingly match them in technology, design, convenience and perceived quality. And they must serve an array of buyers who want gasoline vehicles, hybrids or EVs, rather than having the luxury of concentrating on a single powertrain. Premium brands also face more global challenges than mainstream brands. These include a faster transition to EVs in many significant markets, as well as greater exposure to tariffs on non-U.S.-assembled vehicles, which has disproportionally tilted the premium vehicle mix toward higher-priced EVs. As a whole, premium brands are facing challenges from many fronts that make it difficult to compete as effectively in the U.S. market.

“The traditional premium formula must expand beyond richer materials, more equipment and perceived brand prestige. The product needs to be demonstrably better, but so do the shopping, delivery, service and ownership experiences. A premium dealership must give consumers a reason to visit, and the brand must explain why its vehicle is worth the additional money when the less expensive alternative offers comparable screens, safety technology, and comfort features.

“The over-arching message is clear: the affordability issue is not eliminating demand; it is redirecting it. Mainstream brands are gaining because their vehicles now satisfy practical, technological and emotional expectations that were once closely associated with luxury products,” said Power.