Generation Why: BMW And Mercedes Ignore Coach At Their Peril, Part II
After a long slog through NAIAS and getting TTAC’s house in order for the new year, I was delighted to see the response to my first big endeavor of the year, my Generation Why piece. But with 174 comments and multiple tangents, I wanted to open up the floor to clarify a few things.
1) I should have been more clear in my thesis. While I highlighted both the BMW 320i and the Mercedes-Benz CLA, due to having both of them debut at NAIAS, I do not think they can be weighted equally
2) The 320i is really not that drastic of a departure for BMW’s North American product range – or world product range for that matter. As I mentioned, Canada has had a 3-Series model below the 325/328i for over a decade. This model is actually fairly spartan in its options and features (at least the E46 and E390 variants were) and it’s not unusual to find stick shift models purchased by older guys who just want a fun sports sedan. We all know that the majority of these cars in the U.S. will not be equipped like this, but the point remains the same – it’s not such a departure from BMW’s past ethos. Unfortunately, a number of commenters seized upon the 320i example – to the point of turning it into a strawman – as a means of criticizing my thesis (that a premium auto maker’s quest for volume and short term profits will ultimately erode that brand equity over the long term).
3) I should have been more clear in my piece that the product that’s really in danger of doing damage is the Mercedes CLA. The 320i is ultimately a 3-Series, and part of BMW’s core range. The CLA on the other hand, is a strange bird for Americans. It is a stubby, compact car with odd proportions. For those in the know, it is a front-drive, four-cylinder Benz, something that those types will equate with a cheaper car. For those who don’t know, it’s a Mercedes, but it’s small – and small does not mean premium to many American car buyers. Yes, Mercedes and BMW are full-line car companies in Europe. But merely having a car in Europe is a privilege Anything larger or more expensive than a Golf is a luxury, and that’s why the A/B-Class, 1-Series and A3 work over there. They are right-sized, but pricey enough to let everyone know you’re not clipping Carrefour coupons.
4) I still re-affirm my belief that allowing too many people to obtain a premium product harms its very nature. Let too many people into your exclusive nightclub and it suddenly becomes passe. If too many people can buy your premium clothing line at T.J. Maxx or Marshalls, its seen as a mass-market product, or worse, something for poor people. I’m fairly agnostic when it comes to “brand values” or “heritage” – that stuff is just pap cooked up by suits and sold to wide-eyed types as a marketing narrative. I find it conceivable that, in such a crowded, competitive marketplace, traditional Mercedes customers could abandon the brand if too many undesirables are seen as entering the brand via the CLA and other lower-end cars. In more affluent communities, there are already soccer moms driving AMG SUVs merely because they are more expensive than the more pedestrian GL550s and ML320 Bluetecs. If this is the trend, then how much more damage can a $30,000 compact do?
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Derek hit the nail on the head with his thesis. Lots of you here are missing a multitude of crucial factors regarding the topic. 1. These brands aren't just luxury brands. Luxury is subjective, these are premium brands. Something inherent to the term premium itself is exclusivity. Look up the definition if you must. 2. There are many studies showing that premium buyers DO purchase vehicles based on the brand status. If you don't like that then you are in the minority. Also many of you should take some time to understand why that is so offensive to you. I know for many of you it upsets your socialized ideals because brand status is indicative some disgust with income inequality but keep in mind that most of those individuals, at their core, are simply seeking to use the premium item to express their individuality and separate themselves from what they perceive as the masses. 3. Quality in the premium segment is certainly higher but anyone who actually owns one (I own several) would easily acknowledge that their quality, though measurably higher, is not enough to justify the $31,800msrp of a BMW 128i for example. Its just a fact, the quality difference between a Passat and an A6 just isn't as gross as many of you would like to portray. 4. The same reason why VW couldn't sell very many Phaetons is the same reason why vehicles such as the CLA could effect the sales of their more expensive and more profitable models. A recent study released by Toyota on behalf of Lexus indicated that when people purchase a premium vehicle they perceive their purchase as 'buying into a brand' even above the specific model they purchase. The same factor that would make the CLA successful is the same thing that could effect the brand, not necessarily sales overall. Anyone who would disagree could simply view Mercedes current sales figures, compare them with figures from the 70's and then compare the brand perception now as opposed to during the 70's. Sales significantly increased and perception of the brand is lower.
Late to the ballgame here...but this is a novel concept: People will buy what they want. I'd love a stripper 3-series. Cloth, manual, crank windows. But I digress, that went away with the E30. Maybe that's what a base Wrangler (strangely) appeals to me so much. Perception is the new norm. If the buyer perceives a difference (imagined or real), then they'll pay for it. My mother wanted a C-class for the perceived "I made it" factor. But she wound up testing (and loving) a new Verano, which is now parked in her garage. Not sure what that says for her, exactly...:)