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The New Face of Luxury

High-end auto makers are reaching beyond rich leather and burlwood interiors to distinguish themselves. As posh down-market competitors press from below, choices like green engines, smaller vehicles and wifi are driving the luxury category
Paul A. Eisenstein
From the Print Edition:
Sylvester Stallone, July/August 2010

There's a midway feel to Switzerland's Palexpo conference center when the annual Geneva International Motor Show rolls into town as scores of automakers jam onto the crowded floor hawking their wares. During the event's two-day press preview, giant video screens, blaring sound systems and some nearly naked women vie for the attention of nearly 10,000 automotive journalists from the far corners of the globe.  

But it wasn't hoopla that drew a crowd to the early morning news conference at the small Porsche display this year-just a top-secret project tantalizingly hidden under a heavy drop cloth. Surprisingly few secrets are kept, at least for long, in the auto industry, but Porsche has a knack for delivering such surprises as the unveiling of its first sports-utility vehicle, the Cayenne, a decade ago. But what CEO Michael Macht unshrouded wasn't as earth-shaking at first glance: a sleek two-seat convertible built for speed, which is by rights the hallmark of the brand.

But the real story was what Porsche had hidden underneath the carbon fiber skin of the 918 Spyder Concept: a sophisticated plug-in hybrid drivetrain that could move the concept car from 0 to 100 kmh (0 to 62.5 mph) in just 3.2 seconds on its way to a top speed of 198 miles per hour, while still delivering a jaw-dropping 78 miles a gallon. Equally impressive, the 918 prototype had a large enough lithium-ion pack on board to let a driver plug into a standard electric outlet-or a high-voltage quick charger-and get 30 miles on battery power alone. "This way, you can go very fast and it still would be socially acceptable," said Macht. 

A production version of the car is under serious consideration, and we can expect to see its advanced drivetrain-a 500-horsepower V-8 combined with a pair of electric motors, one on each axle, that together develop another 218 horsepower-on an existing model-think 911 or Boxster-within the next two to three years. And Porsche is not the only luxury brand to be lured in by the hot topic of the auto industry: "electrification."

It isn't just such mainstream players as Ford, Toyota and Hyundai that are going green, but the top tier of high-line manufacturers, a list which includes the likes of Audi, Mercedes-Benz, BMW and even Ferrari. Driven by a variety of pressures, from tough new emissions and clean air rules to shifting social tastes, the luxury market is going green and electric propulsion is going to be an essential element in that transition. 

Nor is this the only direction in which the established high-line car makers are turning to distinguish themselves in a market that is providing increasing pressure from below. Expect to see advanced electronics, smaller formats and more personalized choices among the options available at luxury car dealers in the near future.

The demand for ever-present connectivity is spurring the market segment. Digital technology now differentiates high-end products more than the traditional handcrafted wood and leather features. By some estimates, electronics will account for more than a third, and perhaps nearly half of the price tag of a luxury car in the coming decade. 

Staying on top of the digital race will be a challenge for even the best luxury makers, however, as new entrants and such plebian brands as Hyundai shake the very definition of luxury by aggressively reaching up-market. In our new era of frugality, high-line marques may need to find new ways to justify the significant premium that customers were once willing to pay just to display, for instance, the Mercedes tri-star or the BMW spinner. 
Small is Beautiful? 
Automobile luxury has traditionally been sold "by the inch and pound," according to the analyst Stephanie Brinley, but "small cars are starting to gain." The Geneva show provided a window into this changing world.  

Perhaps the most stunning example shared the Aston Martin stand with more familiar offerings-the DB9 and V8 Vantage-from the brand. At 120 inches, nose-to-tail, and producing 97 horsepower, the Cygnet is dwarfed both in size and output by its brethren, each of which is about half again as long and more than four times as powerful. Set to launch in 2012, the new model was developed as part of an unusual partnership with Toyota. The 2+2 hatchback is billed as a luxury urban commuter car, and considering the shift in global markets, it makes sense. From Berlin to Beijing, the world's population is moving to big cities, where space is a luxury and high performance is becoming increasingly irrelevant.  

"Many of our customers have need for a small car for urban and city use," contended Ulrich Bez, Aston's CEO. But the lavish interior of the joint-effort vehicle is a far cry from Toyota's own IQ minicar. Cygnet is swathed in two-tone leather, offset by piano-black and aluminum surfaces and an Alcantara headliner. And it's loaded with technologies that the British marque believes will justify a price tag in excess of $35,000, easily twice what a mainstream offering would go for. 

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