Luxury Car Companies Grow By Abandoning Luxury

Luxury car companies have begun to move down market
into the $35,000 range, which is the realm of
the more pricey Buicks and Fords.  It is easy to see why given the limited market for best sellers such as the Mercedes E-class and  BMW 750, which cost between $80,000 and more than $100,000.   High-end automakers, such as Daimler Benz and BMW, may find that the lure of volume sales begins to ruin their images as builders of the best cars in the world.

Porsche already offers the Boxter at under $50,000.
It has stripped down its extraordinary Cayenne SUV,
which used to have a bottom price of more than $60,000, to under $47,000.

BMW has just announced, according to Bloomberg,
that it will offer a new version of its X3 small
SUV for under the price of an Audi Q5, which has
a $38,850 sticker. Audi has sold 16,636 Q5 models
this year, up 78% from last year.

US car companies know that they must have a major
presence in the $30,000 to $40,000 vehicle price
range. The new flagship Jeep Grand Cherokee SUV
sells for nearly $35,000. The model has to be a success
for the turnaround of Fiat’s Chrysler division to work.
The same holds true for GM’s Cadillac division. Its
CTS Sports Wagon sells for under $40,000. It cannot
afford to lose market share to BMW or Audi.

The American manufacturers are likely to offer
significant incentives to hold on to what is the
high-end of their model lines which compete with
the low-end of the offerings of the German imports
On that basis, Germany’s move down market may
be very costly both in terms of financial losses
and losses to its reputation. A $38,000 BMW might
as well be a Jeep with a German nameplate

Douglas A. McIntyre