TURIN - "Premium" is a slippery term in the auto industry.
Automakers that blend performance and luxury attributes into their brands increasingly use premium to describe themselves.
But those same manufacturers disagree on exactly which other brands should be part of the club.
Take BMW CEO Helmut Panke. "There are just two global premium brands, BMW and Mercedes. Three in North America, where Lexus also has to be taken into account," he says.
Panke's remarks pointedly exclude rival Audi - even though the Volkswagen group's luxury marque is challenging BMW and Mercedes in Europe and elsewhere.
Automakers like to build premium models. If a brand is seen as premium, the manufacturer can dramatically raise prices and boost its profit margins.
Premium carmakers such as BMW, Porsche and Audi lately have done better financially than most mass-market manufacturers.
Automotive News Europe asked financial analysts to define what attributes make an automobile "premium." The experts didn't agree. But there was some consensus that premium vehicles tend to have:
For example, all call BMW a premium brand, although it sells more cars than some volume manufacturers. Can BMW still be considered a premium carmaker with 2004 global production at 1.06 million vehicles?
"It is only 2 percent of global market share," says Adam Jonas, European auto analyst at Morgan Stanley in London.
Secondly, premium brands have always been pioneers in introducing new electronic devices, but the recent increase in unexpected electronics glitches in high-end models has upset customers, making electronics less appealing.
"Almost irrespective of quality or capability, it is the image portrayed which is most important, as we have seen so distinctly with the Jaguar
X-Type and Ford Mondeo, which share platforms and many key components," says Sabine Blumel, senior analyst of European automakers at Banca IMI in London.
Yet the image of the same brand can vary widely in different markets.
"Volvo is far less premium in Europe than in the US," says John Lawson, managing director in European automotive research at Citigroup Smith Barney. "In addition, [Volvo] is handicapped by a range where historically at least half of the volume has come from smaller cars, which fit few perceptions of a premium brand."
Can a premium brand make a non-premium car? Jonas thinks this may be true for the Mercedes-Benz A class and definitively for Mercedes' sub-brand Smart.
Then can models from mainstream brands move up to premium territory?
"The VW Touareg and Phaeton are good examples [of achieving it,]" says Colin Couchman, associate director at Global Insight in London. "The Toyota Land Cruiser 100 and some other SUVs are also worthy of consideration."
But Arndt Ellinghorst, head of European automotive research at Dresdner Kleinwort Wasserstein in Frankfurt, disagrees.
"Every company can produce a great quality car, but that has nothing to do with being premium," he says. "The only question is whether it can earn back the cost of capital with it."
Steven Blackman, head of the automotive practice at consultant Ernst & Young in London, also disagrees.
"The badge is important," he says. "The VW Phaeton does not achieve a price advantage and the [VW] Touareg sells at a major discount to the [Porsche] Cayenne."