Mercedes and Audi all have a sub-$30,000 entry in their American model ranges. BMW’s cheapest model is just a few hundred dollars above that price point. Infiniti will likely have their own model in that space. So why not Lexus?
Speaking to Automotive News, Lexus boss Mark Templin said
“We could go down and build a car under $30,000, but it would be decontented, and you’d be cutting corners. It wouldn’t be a Lexus…To be honest with you, you can’t build a Lexus with the quality, the durability, the reliability, the craftsmanship, the content that we put in a Lexus and sell it profitably under $30,000. You just can’t do it.”
Templin’s comments are about as clear a swipe at the Audi A3 and Mercedes-Benz CLA as one can get. While CLA sales have been big for Benz (as much as 11 percent of the brand’s total, by AN‘s count), reviews have been mixed.
Mercedes-Benz, like other European luxury brands, face an additional dilemma beyond the usual matters of scale, volume and profitability requirements associated with those issues. In many mature markets, their buyers are getting older, while a new generation of buyers is both moving away from cars, and arguably less able to afford a new luxury car. Products like the CLA and A3 offer an affordable entry-point into the brand, while also appealing to the aesthetic, environmental and economic tastes of the Millennial generation. Lexus doesn’t necessarily have this problem in the same way that the Germans do, but they also don’t have much of a presence in Europe either.
What Lexus is doing, as AN pointed out, is attempting to stake out the “high ground” by keeping the price floor above $30,000 (the entry-level CT hybrid starts at about $32,000), which will ostensibly further entrench their “luxury” position. But Lexus, for all its success, has never achieved true global success as a luxury brand, which is something that only the Germans have managed to earn. And as we all know, it’s easier to reach downmarket than try and move up. The A-Class was a hit for Mercedes, but Volkswagen didn’t fare well with the Phaeton. And Audi is just finally turning the corner after a decades long climb to Tier 1.