The mobility sector is undergoing a period of transformation, and luxury automotive brands must stay ahead of the curve and ride the changes, all while remaining true to their DNA and brand identity. In the interview below, Emmanuel Thierry, Partner, Mazars and Peyman Kargar, Senior Vice President and chairman, INFINITI Motor Company, Japan, discuss evolving consumer expectations, emerging trends and challenges ahead for luxury automotive manufacturers.
This conversation has been edited and condensed for clarity.
Emmanuel Thierry, Mazars: For several years, the automotive industry has been driven by a digital transformation and the global health crisis has further accelerated this shift. New forces, such as autonomous driving, electrification, connectivity and enhanced buyer experiences are revolutionising the sector. While several industries have taken a hit from the pandemic, we have seen historically that the luxury sector is one of the fastest to bounce back when a crisis subsides and already, much growth is expected. The global luxury car market was valued around USD 450 billion in 2021 and the market is projected to grow to USD 655 billion in 2027. Yet, with so many emerging technologies and changes in consumer preferences and priorities, brands must continuously adapt to stay ahead.
You have been in the automotive industry for over two decades and in June 2020, after several years of working at Nissan Motor Company in their Asia and Middle East region where you ran 80 unique markets, you became Chairman of INFINITI Motor Company, Nissan’s luxury vehicle division. How can businesses like yours ride these changes to their benefit and balance short and long-term goals in the face of industry disruptors? What ‘must-do’ items should be on the agenda of every player in the luxury automotive industry right now?
Peyman Kagar, INFINITI Motor Company: In face of a changing industry, I have tried to institute a more ‘common-sense’ approach to the business, encouraging our team to prioritise a healthier balance of performance metrics to ensure we are building a sustainable luxury brand for decades to come. From research and development, to quality and marketing, I have been lucky to experience the entire value-chain of the automobile, which has allowed me to have a holistic approach to our business strategy.
While there are several ‘must-dos’, the most important is to do everything in line with your brand and its identity. At INFINITI, we have aligned decision-making to protect the long-term vision of our brand while catering to short-term needs. I am a big believer in promoting open debate and discussion among my leaders and listening more to the market, which has a strong pulse on consumer priorities.
Another ‘must-do’ is securing the right talents – without them, there is no future for success in the industry, which is why this is one of my golden rules as a leader at INFINITI. Talent Management is not only an HR matter, but also a core asset to every manager at every level: a talent at the bottom of the organisation chart can be more important, with more impact, than the COO of the company, for example.
On top of that, brands must consider short-term performance as a step to building a better future rather than an ambition apart. This way of looking and acting has a huge influence on team motivation and helps lay the foundations of a healthy company.
Managing market complexity on a global scale
Emmanuel Thierry: With regulations, safety obligations, heavy investments, late returns and low margins in comparison to other industries, the automotive industry is one of the most complex industries in the world. And managing these market complexities in a global context is no easy task. Regulations are becoming tougher, and customers are seeking more exciting technologies and innovations. To add to the complexity, the pandemic has triggered chip shortages, which require huge investments to resolve – often without quick returns.
What’s more, not all customers are the same: their needs and demands vary by region. Given this context, what is the best way for the sector to stay sustainable and profitable? And with regulations differing from one region to the next, how can car markers stay viable while covering different markets and diversifying investments?
Peyman Kagar: In the automotive industry, brands need to think permanently, short-term, mid-term and long-term all while maintaining continuous cost optimisation activities. In addition, they need to develop and nurture partnerships to share costs and investments – no one can succeed alone in this industry.
Each new market requires a huge investment and a new business model, meaning it is important brands do not underestimate the level of preparation required to enter a new market. Geographic expansion is a big decision and of course, strategies vary from in different companies and countries.
While luxury trends differ in each region, at the end of the day a Louis Vuitton product stays a Louis Vuitton product no matter where it is sold, and in the automotive industry, the same logic applies. Luxury brands must stick to their codes and remain representative of their DNA while managing differences in compliance and local regulations. For example, in our new QX60, we made minor modifications to adapt to consumer markets in China versus the US, which is why production destined for China was done locally to perfectly align with Chinese customers’ expectations without compromising any of the luxury codes that INFINITI represents.
In some cases, global expansion can be a solution to amortising heavy central investments elsewhere, such as on products in mass market businesses like automotive. It can help reduce risk, as countries do not always generate the expected revenues and profits. In my past roles, there were occasions where Europe was down, but we were doing well in emerging countries and vice versa – so there was always a ‘safe side’ that was helping us weather a storm of unsteady economic situations.
From local innovation to global influence
Emmanuel Thierry: Asia is often viewed as the world’s consumption engine. The Asia Pacific region accounts for 60% of the world population and is a key market to many global industries, including automotive. With rising population, the demand for effective mobility is increasing and several countries in the region have been preparing for this through steady investments, notably in China, where subsidies have helped build the largest market for electric vehicles in the world.
Having worked in the mobility sector across several regions, including Africa, the Middle East, South Asia and now the Asia Pacific region, what would you consider to be the stand-out mobility trends in China and the Asia Pacific region as a whole? And do these trends influence global mobility?
Peyman Kagar: For decades people underestimated the capabilities of China and the Asia Pacific region to lead innovation and technological leaps in automotive and mobility. Today, we see how years of consistency and long-term policies within these countries have led to a strong mobility industry that surpasses other giants across the world. The region is home to stand-out technologies in connectivity, electrification, and competitive engineering.
These trends and capabilities undoubtedly have a global influence. Mobility giants used to out-source their production in China, but today some of them are requesting Chinese partners to provide the most advanced features on the market. We can’t deny that major players are carefully observing the newcomers in China and Asia in mobility and electrification – and this is only the beginning.
Redefining luxury in an unpredictable market
Emmanuel Thierry: Today, the relationship between a luxury brand and its customers is more important than ever. It’s not just about the sale, but also what happens before and after: how the brand makes the customer feel and what it enables them to do is equally important. With the pandemic accelerating digital trends across the board, buyers are opening up to new ways of purchasing. For example, a study in the US showed that 61% of buyers are now open to buying vehicles online – almost twice as many (32%) as before the pandemic. And we’ve seen that INFINTI has tapped into this through ‘INFINITI NOW’.
Looking at today’s luxury automotive market, what kinds of demands are customers voicing and how should the industry – and INFINITI, adapt to these new trends?
Peyman Kagar: Luxury customers don’t chase commodities – they look for uniqueness, which is what luxury is all about: the unique design and high-quality products that spur emotion and desire. But luxury products cannot be without a refined customer experience representing the DNA of the brand. And it is essential that luxury brands stick to their identifiable codes and values because if brands lose sight of this, they no longer become recognisable to customers and risk losing their appeal.
INFINITI was born to defy conventions. We produced a lot of technological breakthroughs and are preparing several great innovations for our future generation of products, including technological leaps in safety, comfort and driving performance. I cannot disclose them here, but I can tell you that we will bring new technologies connected to our DNA, which is daring, forward-looking and human- centric. INFINITI wants to offer a luxury to be lived in and corresponds to customers who dare to be different and express themselves.
As you mentioned, we introduced ‘INFINITI NOW’ to the US market to answer the growing digital demand. Customers can purchase a car entirely online with sales, leasing, test drives and service at their disposition. We have conducted several studies to understand how customer expectations would react to this approach and we have thus far received positive feedback from customers and dealers, which is why we have decided to go global with this concept and allow customers to seamlessly navigate from digital to physical and back – wherever they are.
Looking ahead, luxury and premium car trends will continue to evolve with the rise in new technologies available, and today there is also a larger focus on personalisation. For brands the main challenges ahead will be integrating these trends into their products and services while remaining faithful to their identity. For example, electrification will not be a differentiation element for a brand as it will be a commodity by 2030, 2035 – and it should be seen as an enabler rather than an objective.