Automotive News: "$30,000 is the new luxury car hot spot"
#1
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Automotive News: "$30,000 is the new luxury car hot spot"
http://www.autonews.com/apps/pbcs.dl...#axzz2JoFr4gPP
DETROIT -- There's a new price battleground -- $30,000 -- for luxury-car makers as they chase younger buyers with small front-wheel-drive vehicles that are sliding down into mass-market territory.
Mercedes-Benz, BMW, Audi and others are going after the 75 million 30- to 40-year-olds who are forcing "the biggest changes the automotive industry will face," said Bernie Glaser, head of marketing for Mercedes-Benz USA. "They have big expectations for products and brands."
Those buyers cannot and will not pay the $40,000-plus sticker prices some of their status-conscious baby boomer parents can afford, industry researchers say. Yet they demand "attractive highly styled cars and the right technology," Glaser said.
Nonluxury brands are likely to feel the heat from new models such as the Mercedes-Benz CLA, which was shown to journalists just before the Detroit auto show.
"They could eat into the mass market," said IHS Automotive analyst Rebecca Lindland. "A $30,000 Mercedes -- and they will cap the car at $35,000 -- is an incredibly competitive price point, even against the higher-end Honda Accord."
The young shoppers targeted by Mercedes, BMW and Audi want fuel-efficient four-cylinder engines -- the engines most luxury brands shunned for the United States until two years ago -- without compromised performance.
Many of the cars will be front-wheel drive, although they'll perform like luxury vehicles, Mercedes-Benz and BMW executives say. All-wheel drive will be optional on many models.
"Our small cars will drive and feel like BMWs," said Paul Ferraiolo, manager of product planning and strategy for BMW of North America.
Mercedes-Benz is leading the charge with the fwd CLA, a sleek sedan with coupe styling that will debut this fall. It's the first of three new compacts priced at about $30,000 that Mercedes will bring to market by early 2015.
Last week, BMW announced it will offer a 320i sedan starting this spring for $33,445, including shipping -- $4,300 lower than today's entry-level 328i sedan.
"It is a full-blown 3 series," said Ludwig Willisch, CEO of BMW of North America. "We wanted a clear offer to attract younger people who enter the brand."
While BMW says the average 3-series buyer is 46, the 320i will appeal to 30- to 40-year-olds, said Victor Leleu, 3-series product manager.
"They want the 3 series, and it is a hard car for people who are in their first job to attain," he said.
In August, BMW introduced the X1, a compact crossover with rear-wheel drive or optional awd that starts at $31,695, including shipping. It's small -- 175.5 inches long -- but not as small as BMW's new fwd family of cars that starts to arrive in 2014.
The first of those models will be a wagon based on the Active Tourer concept that debuted at the Paris auto show in September. BMW won't specify what other fwd models are in the pipeline but says the platform will be used for at least 12 new or replacement vehicles for BMW and Mini.
Early next year, Audi plans to introduce the new A3, a fwd four-door sedan smaller than the A4 that is meant to compete with the BMW 3 series. Audi's Q3 crossover also is coming next year.
The A3 will be priced under $30,000; and if Audi continues its aggressive pricing strategy, it will position the Q3 below BMW's X1 and bring it in at $30,000, or just over.
Cadillac has entered the fray with the ATS compact sedan that went on sale in September with a base price of $33,990 with shipping.
This summer Infiniti's volume-leading G37, which starts at $38,255, including shipping, will be reborn as the Q50, using the G's existing 3.7-liter V-6. But Infiniti later plans to introduce a smaller-displacement turbocharged four-cylinder optional engine derived from the Mercedes Benz C-class four-cylinder.
Infiniti's more ambitious move will come in the next two years with the introduction of a smaller, lower-priced vehicle that will become the brand's entry point.
Mercedes-Benz will follow up with the GLA compact crossover in mid-2014 and the B-class electric sedan in early 2015. The CLA has collision prevention, attention assist and stop-start as well as the mbrace2 cloud-based entertainment and communications system that offers concierge services and links applications with smartphones as standard equipment.
Lindland of IHS says the $30,000-or-so Mercedes-Benz offerings could lure mass-market brand customers.
"You could argue that people will say, 'For just a little more money I can buy a Mercedes rather than the touring version of the Accord that goes for $35,000,' " she said. "It presents a threat to the mainstream marketplace. And it is becoming more socially acceptable to be in a luxury vehicle."
Still, outsiders wonder whether a $30,000 Mercedes-Benz will damage the brand's image. Mercedes-Benz USA CEO Steve Cannon answers: "The only way to dilute the brand -- just ask Jaguar about the X-Type -- is to do it wrong. That is why we held Stuttgart off for many years and said we will not bring the [first-generation] A and B class because those vehicles did not fit the Mercedes-Benz brand. They were small, boxy and utilitarian."
He says a bigger danger than brand dilution is not bringing new buyers into the brand.
Going more mainstream could be a challenge for some luxury brands, said John Mendel, executive vice president of American Honda Motor Co.
"You can de-content too much," he said. "I don't know if people buy a brand because it's de-contented -- if it's Cartier but it's not real silver," he said. "There's a lack of genuineness if you err on the side of being the Ferrari of Costco."
Mercedes-Benz, BMW, Audi and others are going after the 75 million 30- to 40-year-olds who are forcing "the biggest changes the automotive industry will face," said Bernie Glaser, head of marketing for Mercedes-Benz USA. "They have big expectations for products and brands."
Those buyers cannot and will not pay the $40,000-plus sticker prices some of their status-conscious baby boomer parents can afford, industry researchers say. Yet they demand "attractive highly styled cars and the right technology," Glaser said.
Nonluxury brands are likely to feel the heat from new models such as the Mercedes-Benz CLA, which was shown to journalists just before the Detroit auto show.
"They could eat into the mass market," said IHS Automotive analyst Rebecca Lindland. "A $30,000 Mercedes -- and they will cap the car at $35,000 -- is an incredibly competitive price point, even against the higher-end Honda Accord."
The young shoppers targeted by Mercedes, BMW and Audi want fuel-efficient four-cylinder engines -- the engines most luxury brands shunned for the United States until two years ago -- without compromised performance.
Many of the cars will be front-wheel drive, although they'll perform like luxury vehicles, Mercedes-Benz and BMW executives say. All-wheel drive will be optional on many models.
"Our small cars will drive and feel like BMWs," said Paul Ferraiolo, manager of product planning and strategy for BMW of North America.
Mercedes-Benz is leading the charge with the fwd CLA, a sleek sedan with coupe styling that will debut this fall. It's the first of three new compacts priced at about $30,000 that Mercedes will bring to market by early 2015.
Last week, BMW announced it will offer a 320i sedan starting this spring for $33,445, including shipping -- $4,300 lower than today's entry-level 328i sedan.
"It is a full-blown 3 series," said Ludwig Willisch, CEO of BMW of North America. "We wanted a clear offer to attract younger people who enter the brand."
While BMW says the average 3-series buyer is 46, the 320i will appeal to 30- to 40-year-olds, said Victor Leleu, 3-series product manager.
"They want the 3 series, and it is a hard car for people who are in their first job to attain," he said.
In August, BMW introduced the X1, a compact crossover with rear-wheel drive or optional awd that starts at $31,695, including shipping. It's small -- 175.5 inches long -- but not as small as BMW's new fwd family of cars that starts to arrive in 2014.
The first of those models will be a wagon based on the Active Tourer concept that debuted at the Paris auto show in September. BMW won't specify what other fwd models are in the pipeline but says the platform will be used for at least 12 new or replacement vehicles for BMW and Mini.
Early next year, Audi plans to introduce the new A3, a fwd four-door sedan smaller than the A4 that is meant to compete with the BMW 3 series. Audi's Q3 crossover also is coming next year.
The A3 will be priced under $30,000; and if Audi continues its aggressive pricing strategy, it will position the Q3 below BMW's X1 and bring it in at $30,000, or just over.
Cadillac has entered the fray with the ATS compact sedan that went on sale in September with a base price of $33,990 with shipping.
This summer Infiniti's volume-leading G37, which starts at $38,255, including shipping, will be reborn as the Q50, using the G's existing 3.7-liter V-6. But Infiniti later plans to introduce a smaller-displacement turbocharged four-cylinder optional engine derived from the Mercedes Benz C-class four-cylinder.
Infiniti's more ambitious move will come in the next two years with the introduction of a smaller, lower-priced vehicle that will become the brand's entry point.
Mercedes-Benz will follow up with the GLA compact crossover in mid-2014 and the B-class electric sedan in early 2015. The CLA has collision prevention, attention assist and stop-start as well as the mbrace2 cloud-based entertainment and communications system that offers concierge services and links applications with smartphones as standard equipment.
Lindland of IHS says the $30,000-or-so Mercedes-Benz offerings could lure mass-market brand customers.
"You could argue that people will say, 'For just a little more money I can buy a Mercedes rather than the touring version of the Accord that goes for $35,000,' " she said. "It presents a threat to the mainstream marketplace. And it is becoming more socially acceptable to be in a luxury vehicle."
Still, outsiders wonder whether a $30,000 Mercedes-Benz will damage the brand's image. Mercedes-Benz USA CEO Steve Cannon answers: "The only way to dilute the brand -- just ask Jaguar about the X-Type -- is to do it wrong. That is why we held Stuttgart off for many years and said we will not bring the [first-generation] A and B class because those vehicles did not fit the Mercedes-Benz brand. They were small, boxy and utilitarian."
He says a bigger danger than brand dilution is not bringing new buyers into the brand.
Going more mainstream could be a challenge for some luxury brands, said John Mendel, executive vice president of American Honda Motor Co.
"You can de-content too much," he said. "I don't know if people buy a brand because it's de-contented -- if it's Cartier but it's not real silver," he said. "There's a lack of genuineness if you err on the side of being the Ferrari of Costco."
#3
Pole Position
$30K range is nothing new, it's been a battleground for more than a decade. The only difference is THEN you could have bought top of the line entry luxury car and NOW you can't. So they are offering FWD hatches for $30K. You could argue that CT gets you hybrid setup for $30K but what do A3 or ILX bring to the table for that much money is beyond me. These new hatches could be even more overpriced than entry luxury sedans.
#5
Can't help but think of such awesome products that BMW, Audi, and Benz have given us in the past:
Actually that whole generation of C-class was a cheaply made turd.
Ugly and very cheaply made on the inside, plus it was 4 cylinder only.
How to pay way too much for a Golf. This model has NEVER sold well in the US.
And the biggest thud of them all, how to pay $5000 more for a Honda Civic
Personally I think automakers are mis-reading the market if they're trying to get 25-30 year old college graduates buying these types of cars. Some people in that age group might be able to float a $500-700 a month car note, but really its living beyond their means if they have student loan debt, are saving for a house, etc. Maybe I'll be proven wrong and everybody will pay $10-15k more for a BMW that is smaller than Civic, Mazda 3, etc
Actually that whole generation of C-class was a cheaply made turd.
Ugly and very cheaply made on the inside, plus it was 4 cylinder only.
How to pay way too much for a Golf. This model has NEVER sold well in the US.
And the biggest thud of them all, how to pay $5000 more for a Honda Civic
Personally I think automakers are mis-reading the market if they're trying to get 25-30 year old college graduates buying these types of cars. Some people in that age group might be able to float a $500-700 a month car note, but really its living beyond their means if they have student loan debt, are saving for a house, etc. Maybe I'll be proven wrong and everybody will pay $10-15k more for a BMW that is smaller than Civic, Mazda 3, etc
#6
Some people in that age group might be able to float a $500-700 a month car note, but really its living beyond their means if they have student loan debt, are saving for a house, etc. Maybe I'll be proven wrong and everybody will pay $10-15k more for a BMW that is smaller than Civic, Mazda 3, etc
#7
Personally I think automakers are mis-reading the market if they're trying to get 25-30 year old college graduates buying these types of cars. Some people in that age group might be able to float a $500-700 a month car note, but really its living beyond their means if they have student loan debt, are saving for a house, etc. Maybe I'll be proven wrong and everybody will pay $10-15k more for a BMW that is smaller than Civic, Mazda 3, etc
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#8
Lexus Champion
Last week, BMW announced it will offer a 320i sedan starting this spring for $33,445, including shipping -- $4,300 lower than today's entry-level 328i sedan.
"It is a full-blown 3 series," said Ludwig Willisch, CEO of BMW of North America. "We wanted a clear offer to attract younger people who enter the brand."
"It is a full-blown 3 series," said Ludwig Willisch, CEO of BMW of North America. "We wanted a clear offer to attract younger people who enter the brand."
With the average price of new car at $30,000, I'm amazed that lux car makers are going for this market.
#9
Lexus Champion
I'm not sure if this is applicable but probably a similar correlation is now being seen in the passenger airline industry.
I mean, the number of people flying business and first class seem to be encountering some slight decreases. What could be the reason for this? Are more-and-more people just contented with economy or those no-frills LCCs or Budget Airlines?
I mean, the number of people flying business and first class seem to be encountering some slight decreases. What could be the reason for this? Are more-and-more people just contented with economy or those no-frills LCCs or Budget Airlines?
#10
Being a young young guy myself, i see that the luxury brands' push downmarket is definately having an effect. A lot of people buy the cheapest luxury models just to say that they are driving a nice car. I'm willing to bet most of the people who drive the lower end cars can barely afford them or bought them used. It is all about status, not that that is anything new. We all know that type of clientele....
I am no different, sadly. Instead of going for a reasonable car, like a camry/accord, I really want a CT, for the luxury, but mostly for the L badge. Although I will very soon, enter a profession which is high paying, I definately see that the strategy is working.
As far as brand dilution, even though the big wigs might not think that it might happen, i think it already has. For mercedes, the first car that used to come to mind for me was the S class. Now i have seen so many Cs and Es on the road, the S does not always come to mind first when someone mentions they drive a Merc.
Same thing for BMW. The very first thing i think about when a BMW is mentioned, is their 3 series.
Lexus? I always imagine an ES/RX.
I am sure i am not the only one who thinks like this. Brand dilution has definately occurred to some extent.
I am no different, sadly. Instead of going for a reasonable car, like a camry/accord, I really want a CT, for the luxury, but mostly for the L badge. Although I will very soon, enter a profession which is high paying, I definately see that the strategy is working.
As far as brand dilution, even though the big wigs might not think that it might happen, i think it already has. For mercedes, the first car that used to come to mind for me was the S class. Now i have seen so many Cs and Es on the road, the S does not always come to mind first when someone mentions they drive a Merc.
Same thing for BMW. The very first thing i think about when a BMW is mentioned, is their 3 series.
Lexus? I always imagine an ES/RX.
I am sure i am not the only one who thinks like this. Brand dilution has definately occurred to some extent.
#11
live.love.laugh.lexus
iTrader: (42)
Back in 2002 I wanted a $30K IS300, but being 19 I sure as hell could not afford it. A good friend of mines (same age) was also able to buy a brand new 2003 G35 coupe ($30K MSRP) but I had no idea how he paid for it--he made a lot of money waiting tables i believe
Fast forward to 2013, I fall within that 30-40 age group. Sure the $30K luxury options are nice, but IMO I would not opt for one, and would rather have a used LS 460 I also agree that $30K luxury cars are and always will be a hot segment and attracts a lot of young buyers.
Fast forward to 2013, I fall within that 30-40 age group. Sure the $30K luxury options are nice, but IMO I would not opt for one, and would rather have a used LS 460 I also agree that $30K luxury cars are and always will be a hot segment and attracts a lot of young buyers.
#12
I think the new Mercedes offering will be very successful (great styling, great price, great brand perception).
BMW 1 series hasn't resonated with the mainstream buyers, and the A3 just isn't there. The ILX is just a huge flop sales-wise due to pathetic powertrains.
BMW 1 series hasn't resonated with the mainstream buyers, and the A3 just isn't there. The ILX is just a huge flop sales-wise due to pathetic powertrains.
#13
Lexus Champion
There isn't a car from a luxury car maker (ie. BMW/MB/AUDI/Lexus) that sells a car at $30K that is actually a true luxury car.
The cars at that price point are pseudo-luxury and cater to the image concious only.
The cars at that price point are pseudo-luxury and cater to the image concious only.
#14
Lexus Test Driver
Stickers don't mean much when these same manufacturers dump the $35k+ cars with cheap leases. You can lease the current IS and G for around $300/mo. now. Honda Accord and Camry V6 territory.
#15
Lexus Test Driver
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So what in your opinion makes a car a "true luxury car" then?
Last edited by SteVTEC; 02-04-13 at 06:18 AM.