Generation Why: A Sub-$30k Car "Wouldn't Be A Lexus"

Derek Kreindler
by Derek Kreindler

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.

Derek Kreindler
Derek Kreindler

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  • Mchan1 Mchan1 on Sep 15, 2015

    “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.” So don't build one. The current CT hybrid is the lowest cost hybrid and isn't very good, at least to me. A relative has it and I DREAD sitting in it. The passenger seat is CRAMPED for my 6' body and forget about room in the backseat! For a luxury car, it doesn't even have a display radio but a basic radio with SiriusXM option but that's it. For the price of the CT hybrid [which does NOT even include some "options" found in NON-luxury cars for that price], I can get a non-luxury, regular gas vehicle that's ROOMY, fully loaded and offer MUCH more options AND value! Who dafuq are the automakers target audience for the crappy entry level, stripped down vehicles?!

  • Legacygt Legacygt on Jul 08, 2016

    They can say whatever they want but it's likely that there's a team at Lexus looking at the CLA and A3 and trying to figure out how they can turn a Corolla into a luxury car.

  • MaintenanceCosts It's not really much of a thought in the buying process. I would think twice about a vehicle assembled in China but other than that I really don't care. Looking at my own history, I've bought six new cars in my lifetime (I don't think choice of used cars says anything at all). I think the most patriotic of them were mostly Japanese brands. (1) Acura, assembled in Japan (2) Honda, assembled in U.S. (3) Pontiac, assembled in Australia (4) Subaru, assembled in U.S. (5) Ford, assembled in U.S. (6) Chevrolet, assembled in Korea
  • ToolGuy News Flash: Canada isn't part of the U.S.
  • Dave M. My Maverick hybrid is my first domestic label ever. It was assembled in Mexico with US components. My Nissan and Subaru were made here, my Toyota, Isuzu and other Nissan had J VINs.
  • ToolGuy "and leaves auto dealers feeling troubled" ...well this is terrible. Won't someone think of the privileged swindlers??
  • ToolGuy "Selling as I got a new car and don't need an extra." ...Well that depends on what new car you chose, doesn't it? 😉