By on May 4, 2015

2014-CLA-CLASS-COUPE-GALLERY-023-WR-D

Want to know why Mercedes, Audi, Lexus and all of the other luxury players are doing so well these days? Because of less-costly, lower-end luxury models.

The low-end models, whose starting base prices are between $31,000 and $35,000, are pulling in new customers who desire the status a given badge conveys, USA Today reports. Edmunds.com senior analyst Jessica Caldwell explains:

Luxury sales have increased as products have become affordable to a wider audience. Of late, luxury car brands have focused on the lower end of the price spectrum, introducing models such as the Lexus NX, Mercedes-Benz GLA, BMW X1 and Porsche Macan, which are slotted below existing popular SUVs on the price spectrum.

Caldwell adds leasing is also helping bolster the luxury brands’ high status, as most of their offerings are leased. Those who’d rather own their low-end luxury ride opt for long-term financing with low interest rates, with payments spread out over several years.

The brands’ consumer base is also varied. Kelley Blue Book analyst Akshay Anand said buyers were coming from every corner, “especially as Millennials start to create more wealth for themselves and continue to be as aspirational as ever,” helped by an improving economy.

[Photo credit: Mercedes-Benz]

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105 Comments on “Luxury Brands Doing Well On The Back Of Lower-End Models...”


  • avatar
    PrincipalDan

    Hipsters in Mercedes?

    A sign of the end times.

    • 0 avatar
      Marko

      Well, who drives old W123s?

    • 0 avatar
      CoreyDL

      Holy Rich Hipster Junction, Batman!

      I see she tried to park it on the pavement, but missed due to the extreme width of the large CLA.

      • 0 avatar
        PrincipalDan

        I don’t know if “she” did the parking… Somebody had to take the picture.

      • 0 avatar
        bball40dtw

        Ther had to get the full “Key-Lime Pie” sign in the picture. Parking the CLA in front of it would have made the proportions of the photo off.

        And that sign is a waste of ad space in a “transitional neighborhood.” There should be a giant picture of Key Lime pie fighting a bear, dunking over Lebron, or just looking delicious.

        • 0 avatar
          RideHeight

          To me, that MB now has off-road cred.

        • 0 avatar
          CoreyDL

          Lol!

          You’re right about the proportions. I might have parked it sideways, but then you couldn’t see enough badge.

          The pie can fight the bear while some bottles of IPA watch.

          • 0 avatar
            bball40dtw

            “The pie can fight the bear while some bottles of IPA watch.”

            You are a marketing genius.

            Step 1 – make pie
            Step 2 – buy IPA
            Step 3 – have someone with artistic talents paint a giant mural of pie fighting a bear with IPA watching
            Step 4 – profit!

          • 0 avatar
            DeadWeight

            She’s going to feed that ginormous, plastic badge any leftover key lime pie.

            It’s obviously very hungry.

            nom nom nom nom

          • 0 avatar
            CoreyDL

            Lettering above pie mural, block and capitalized, curved in upward arch:

            THE FIGHTING PIE

            Below mural, smaller letters, cursive, straight across:

            On Sixth Street

          • 0 avatar
            bball40dtw

            Does the CLA have the light up three-pointed star?

          • 0 avatar
            28-Cars-Later

            IPA? Mmmmmm Lagunitas.

          • 0 avatar
            DeadWeight

            That plastichrome Mercedes tristar has LED lighting and there’s an option to be able to select over 380 backlit colors.

          • 0 avatar
            bball40dtw

            28-

            Get yourself some Great Lakes Brewing Company Chillwave Double IPA. I bought a 4-pack this weekend and drank all four already.

            Do you get Ballast Point beers in PA? We don’t in MI, but I drank their Sculpin IPA and Grapefruit Sculpin IPA while in AZ recently. Both excellent.

            And we need to start a Truth About Beer, so some sort of website. I know Deadweight is a beer connoisseur too.

          • 0 avatar
            28-Cars-Later

            Not familiar with Ballast Point but I can look for it the next time I’m out. If Great Lakes makes it I’m usually down although I didn’t care for the Lake Erie Monster.

          • 0 avatar
            bball40dtw

            I don’t like Lake Erie Monster or their Christmas beer, but Chillwave was excellent. Edmund Fitzgerald and Elliot Ness are also good beers.

          • 0 avatar
            28-Cars-Later

            There is a seasonal porter which just came available that I think I must have.

            https://www.greatlakesbrewing.com/beer/an-exceptional-family-of-beers/seasonal/alberta-clipper-porter

            Dammit now I have to go to the beer distributor.

          • 0 avatar
            bball40dtw

            You have those wonky state beer stores in PA, right?

          • 0 avatar
            28-Cars-Later

            Yes but with a slight correction. State store sells wine and liquor, a beer distributor is a privately owned business with a licence from LCB thugs to sell beer only. The last few years though they have been granting beer distro licences to grocery stores to the ire of the existing beer distributors.

          • 0 avatar
            bball40dtw

            Walgreens and CVS sell craft beer in Michigan now. The upscale grocery store by my house has enough beer and whiskey/bourbon/scotch selections to keep me busy for hours.

          • 0 avatar
            DeadWeight

            Pliny The Elder (obviously)

            Chimay Grande Réserve (I like Belgian stuff)

            Westmalle Trappist Tripel (again, I like Belgian stuff)

            HopSlam Ale

            Westvleteren XII (obviously)

            New Holland Dragon Milk (I’d put this up against anything and it’s made by New Holland in Michigan!)

            Anchor Steam (I’m sentimental about this – good summer ale with seafood)

            Ayinger Bräu Weisse (great wheat beer)

            Schneider Weisse Tap 1 Mein Blondes (ditto)

            Two Hearted Ale (made in Michigan – Bell’s)

            Stone IPA

            Good old Red Stripe

          • 0 avatar
            bball40dtw

            DW-

            Have you had anything from Brewery Vivant? They do a lot of Belgain style stuff and they are in Grand Rapids. They have some good beers and offer an excellent brewery tour.

          • 0 avatar
            28-Cars-Later

            Dragon Milk, Two Hearted, and Stone IPA? Stop being me.

            Dragon Milk will f*** you up good too, its been awhile since I allowed myself to have it.

            @DW

            There’s a local chain here which specializes in Belgians you would probably enjoy.

            http://sharpedgebeer.com/

          • 0 avatar
            bball40dtw

            I perfer KBS to Dragon’s Milk, but good luck getting KBS. Dragon’s milk is available year round too.

            The 4 year old Bell’s Expedition Stout aging in my basement is my favorite beer right now.

          • 0 avatar
            Fordson

            Brewery Ommegang for Belgians.

            They now make a Belgian-style pale ale I’ll have to try.

            My new favorite IPA – Big Ditch Hayburner.

            Stone IPA is awesome – Lagunitas, too.

          • 0 avatar
            Slow_Joe_Crow

            What about Ninkasi Total Domination IPA?
            I can even find it at 7-11 on a good day.

        • 0 avatar
          RHD

          The pie shop is where the car’s owner works.

          • 0 avatar
            28-Cars-Later

            Hmmmm lease payment $465/mo, pay rate $9.70/hr. Yeah that’s about right she does work there.

          • 0 avatar
            dal20402

            If you’re paying $465 on a CLA you’re getting well and truly shafted.

          • 0 avatar
            28-Cars-Later

            Agreed.

          • 0 avatar

            Thus Spaketh DW :”That plastichrome Mercedes tristar has LED lighting and there’s an option to be able to select over 380 backlit colors”.

            YOU MEAN THAT IS OE ? I saw that the other day and thought it was the tackiest add on ever. Hey, why not one of those LED boards like you see in convenience stores. It could run
            LOOKATMYBENZLOOKATMYBENZLOOKATMYBENZ

            If I hung out with DW, we’d have a lot of beers in common. Ever been to “taste of the midwest” ?

    • 0 avatar
      racer-esq.

      Her friends all drive Porsches, so she had to make amends.

  • avatar
    bball40dtw

    Is Key-Lime pie ironically cool now? Or is it still something everyone can enjoy because it’s pie?

  • avatar
    jmo

    “They just don’t have the right badge on the hood.”

    I’m calling bull$hit on that one. One can honestly prefer a $35k Audi A3 or 320i to a $35k Accord Hybrid Touring on their respective merits.

  • avatar
    bomberpete

    CLA buyers are lemmings. They’re also one-time buyers. They fell for the CLA lease plan and fancy label, and got stuck with a POS. This will do more to trash the Mercedes-Benz brand here than anything else Stuttgart has done in 20 years.

    • 0 avatar
      2drsedanman

      I think you are onto something here. It would seem by lowering the entry standard, you are taking away a bit of the exclusivity. If everyone is allowed in the “cool” club, is the club still considered “cool”. I, too, wonder what the customer makeup is of these entry level luxury brands.

      • 0 avatar
        CoreyDL

        I thought this was the reason why Mercedes refused to sell its plebeian work truck and utility offerings in the US for such a long time.

      • 0 avatar

        Ha ! I can’t wait to see the second and third owners “customizing”. I cringe at many of the recycled e46 cars….what has been done to them. This will be worse. OTOH, will a CLA last as long as an e46 ?

    • 0 avatar
      sportyaccordy

      I really doubt that..MB and VWAG made it out of the late 90s/early 00s unscathed, despite reaching an all time low in quality/reliability. There’s nothing Germans can do to ruin their brands.

      Plus MB has been selling little cheap FWD POSs for nearly 20 years now, and people have no problem buying S classes from the same dealerships. MB will be fine.

      • 0 avatar
        bomberpete

        I would agree with you in Europe, where it’s accepted that D-B has to make commercial vehicles and crappy ones to be a major maker. Here, not so much.

        Imagine how many “I expected so much more from a Mercedes” complaints are already being heard?

        Also, VW is unvanquished in Europe but look at how they have squandered the base brand here.

        I know Audi is doing great, but they are fully-differentiated and better vehicles compared to VW. The moment the cost-cutting and sharing starts again, Audi could head to the outhouse too.

        I won’t comment on BMW, because with this crowd that’s almost as bad as discussing gay marriage.

        • 0 avatar
          sportyaccordy

          None of those complaints came when MB transitioned from the W124/W140 to the abysmal W210/W220. The cars were beautiful and state of the art, but they had zero durability/reliability. Easily MB’s worst point. Similarly with VW all you have to say is “MKIV” and there’s a collective shudder among automotive enthusiasts. The cars had a nice veneer but they were horribly designed and built. And yet MB and VWAG are still in business, arguably doing better than ever.

          So no, nobody is saying “I expected so much more” from a Mercedes. The CLA is a step up from MB at its lowest. There are no expectations of MB, except to look expensive. The Jetta/Passat are real downgrades in character, but upgrades in ownership experience compared to the “characterful” MKIV crop. MB will be more than fine. VWAG will be fine as well.

      • 0 avatar

        I don’t know. You can’t type “VW” without the TTAC autocorrect changing it to “unreliable VW”

      • 0 avatar
        Sigivald

        Yeah, if the W210 didn’t hurt MB’s brand perception, and the W201 190s didn’t cheapen “exclusivity” – let alone all those C230 Kompressors in the 90s – I don’t know that the CLA and GLA will.

        I think the CLA is *ghastly*, but plainly the judgment is not universal.

        (I also think the CLS is just as bad, but that’s just the sort of bad-design phase Stuttgart seems to go through now and then lately.)

    • 0 avatar
      TMA1

      Check out the people trying to dump their CLA leases on sites like Swapalease. At some point, $560 a month to bang your head on the ceiling of the CLA must get tiring. Could have had a Camry for a lot less, lol.

      • 0 avatar
        28-Cars-Later

        Sometimes on those sites I see Nissan Altimas for 4 bucks or more and I think WTF.

        • 0 avatar
          TMA1

          I check them out sometimes just for fun. I once saw a woman on Craigslist trying to dump her CLA for $469/mo. I actually wrote her, asking what kind of terms ended up in that payment. Never got a response.

        • 0 avatar
          TMA1

          I need to stop looking at this site. There’s a guy in NY looking for someone to take over the last 13 months of BMW lease, at only $1,030/mo.

          It’s a ’13 328xi. The current buyout value is $51K. How do people get themselves in these situations?

          • 0 avatar
            CJinSD

            Probably went with the little taxi because an S-class would have been too expensive.

          • 0 avatar
            kvndoom

            One day I’ll have to tell the story of the $60000 Dodge Ram. Now sure you can configure a Ram for $60000 here now in 2015, but I assure you it wasn’t possible in 2001.

            And I still signed the papers for it. Yes I was that stupid back then. My BK was well deserved.

    • 0 avatar
      el scotto

      CLA leases will be like a tart’s knickers; cheap and easy to get into. The badge whores won’t have a bit of shame; just worries that the tri-star will light up. An old GF of mine parks in the parking lot of first world problems; drives an S6 that goes like a bat escaping from the confines of Hades and some chippies are showing up in CLA’s saying they’re from Germany too. That’s how the CLA will play out, more often than not.

    • 0 avatar
      Chan

      CLA lessees may not experience post-warranty headaches, but the true test of whether it was “worth it” comes when you suddenly have to get a baby into and out of the back seat. Every time you are forced to choose whether to bang your head, or your child’s head, or maybe even both, onto the C-pillar. I won’t go into the actual driving quality as reports are mixed, but I can imagine even getting adults to bend over for it is embarrassing as an owner–errr, lessee.

      Although I dislike the price increase of the C-class, I have a feeling some buyers will be pleased that a little exclusivity is being returned to the model. This shows best in the seriously impressive interior and the stately exterior that combines restraint with presence.

    • 0 avatar
      Chan

      Or, they will live with it in denial and continue the trend until CLAs start to outsell–sorry, outlease–Corollas.

      Meanwhile, those with the actual means for luxury cars are rolling around in Toyota Avalons. This is a prediction for the year……..how about 2025?

    • 0 avatar
      Toad

      The people who lease CLA’s are probably perfectly happy; they have their status symbol and social “marker” at a reasonable price. Lease for 3 years, repeat.

      Remember that many of the people leasing the bottom tier German import would not know a good car from a bad one. The same people are thrilled to pay $900 for a $50 handbag, $200 plus for jeans, and who knows how much for other fashion baubles. The MB/Audi/BMW logo on the grille is just another fashion accessory.

      Selling fashion items, including autos, has been profitable business for a long time and there is no reason to think that CLA leases will impair that business anytime soon.

  • avatar
    hreardon

    I think there’s a careful distinction that needs to be made between “premium” and “prestige”. At least in my book, when I think of a “premium” vehicle I think of a broad swath of cars: Acura, Volvo, Audi, BMW, Merc, Cadillac all come to mind. There are, of course, different tiers.

    “Prestige” vehicles are to me a completely different class differentiated by a few models (eg: MB S-Class), or brands such as Bentley, Bugatti, Porsche, Rolls, Land Rover.

    I’m probably splitting hairs, but there ya go.

    • 0 avatar
      bomberpete

      I don’t think you’re splitting hairs at all, though I would have disagreed with you 20 years ago.

    • 0 avatar

      That’s fair point. I use the terms interchangeably though. I might want to consider the definitions of the terms. Premium is more of a N American term. In the UK-English zone the categories are budget, mainstream/non-prestige and prestige. “Luxury” might apply uncontroversially to MB’s, Audi’s and BMW’s upper classes of car, plus Rolls and Bentley. After these broad brushstrokes the rest is open to debate. Maserati could be luxury or exotic. Many would call a Volvo S80 a luxury car; Mini? It seems niche and premium and ordinary at the same time. Cue interesting discussion.

    • 0 avatar
      slance66

      This hits the mark in my mind. But within the “premium” segment, people will pay more for a Mercedes or BMW than a Volvo, Acura or Buick (or Cadillac, to their displeasure).

      Americans are simply finally embracing high end small cars as the Europeans always have. Small no longer equals cheap. We still love trucks of course.

      By the way, great beer discussion guys.

      • 0 avatar
        Sigivald

        ” But within the “premium” segment, people will pay more for a Mercedes or BMW than a Volvo, Acura or Buick (or Cadillac, to their displeasure). ”

        Yeah, and they’re *suckers* for doing so.

        (I mean, on the general badge-lust level; preferring a *specific* German over one of those for an actual reason of features/performance/value is plausible.

        I don’t understand Acura appeal, but I do understand Volvo – having just bought one – and Buick and even, sort of, Cadillac.

        MB and BMW are offering too little for too much money just now, and MB’s making some ugly cars, to boot.)

  • avatar
    MrGreenMan

    It’s Ritz Crackers and the Depression:

    The period from 2007 and the big stock market collapse and the forced vote-until-they-do-the-Feds-bidding in the House until now has been known for such great remarks as, “It’s not 2006; I can’t just walk down the street and get a job.” and the overuse of the term “new normal”.

    People want something that doesn’t remind them of the drudgery and unpleasantness of everyday life.

    A three pointed star is just a buttery taste above a standard-issue penalty box saltine that makes you think there is more to life than the trip from the maternity ward to the crematorium.

    • 0 avatar
      CoreyDL

      Speaking of which, my relatives tell me that in Oregon, the saltines are shelved with the cookies, and not the crackers. Can someone explain this regional quirk?!

      Also I prefer saltines to Ritz because I find them too greasy and heavy. And they have like 4x the calories or some ridiculous number.

      • 0 avatar
        MrGreenMan

        I agree: I only like a Ritz when drowned in tomato soup; otherwise, too heavy.

      • 0 avatar
        bomberpete

        Thanks. I wish it were a completely original thought but it isn’t. The Germans have been doing this here for 25 years but it’s catching up to them now.

        If you build a crappy product like the CLA or Jetta to a price point, even those who care nothing about precision German engineering will only put up with so much for a brand name beyond the lease or warranty. And next time they’ll go Japanese, Korean, maybe even (shudder!) American.

        This is why GM had its tiered brands. 60 years ago, you’d expect some problems with a Chevy or Pontiac, a few less with an Olds or Buick, and next to none with a Cadillac. That’s what kept the magical money machine working through the Seventies.

        I think the Germans are doing the same thing, only they’re not modeling GM in 1955. Like “Mad Men,” they’re up to 1972.

    • 0 avatar
      shaker

      “A three pointed star is just a buttery taste above a standard-issue penalty box saltine that makes you think there is more to life than the trip from the maternity ward to the crematorium.”

      You, sir, have just distilled “The Truth About Cars” to its most concise form.

  • avatar
    SWA737

    Maybe Cadillac can pose Melody Lee on the hood of an ATS, eating some artisan food truck pickles or drinking a cold brew coffee.

  • avatar
    Nick

    Wait’ll the warranties on the lower end luxury models run out and their owners have to start paying for the all too frequent repairs. Then the bloom will come off the rose PDQ.

    • 0 avatar
      sportyaccordy

      Not a concern dude, all of these cars are acquired through subsidized leases.

    • 0 avatar
      bomberpete

      Yup. This is why boring but practical people buy Corollas.

      In the thriving megalopolis where I live, I know plenty of people who complain about barely being able to pay their bills or that gentrifiers are pushing them out. Then my sympathy evaporates when I see them rolling on used Escalades, Range Rovers, German sedans/SUVs, etc. with rims and stereos.

      The minutes something really expensive goes on those whips, they turn into neglected trash.

  • avatar
    PeriSoft

    That’s the regular key-lime pie. The proximity keyless-lime pie only comes with the premium package, which is $4500.

  • avatar
    SELECTIVE_KNOWLEDGE_MAN

    “The low-end models, whose starting base prices are between $31,000 and $35,000”

    Then it goes on to mention Lexus NX and Porsche Macan, both with a base prices above $35k.

    How about doing the research and realize that the “up to $35k” is a “big German 3” race of balance for sales at the expense of prestige?

    The Macan has a base MSRP of $50k and Lexus only has one car with MSRP below 35k, which without the 2.0t can never become a big player against the German rivals.

    • 0 avatar

      Actually, the Lexus NX 200t does have an MSRP that is just under $34,500. A lot of people my age (early twenties) and in my industry (web design/development) can comfortably afford a car in the $35K to $40K range, and so the NX is a good way to get them into the Lexus brand. Or, for someone moving up from a loaded CR-V or CX-5 or something, the NX isn’t such a jump, since most of those cars meet or exceed the $30K mark when well-equipped, and the NX is compact, unlike the GLA-Class and Q3, so you don’t lose as much space. The Lincoln MKC—which has a similar size advantage over its European competitors—starts at an even lower price: just over $33,000. Again, smart.

      But as far as the entry-level car thing goes, the IS 250, if that’s what you’re thinking of, starts at over $36,000, putting it more in line with the 328i. No, Lexus’ true entry-level, my-first-luxury-car product is the Lexus CT 200h, which is about $32,000, and can probably be had for well under that, because it’s just not a very good car, especially against the CLA-Class, A3 and 320i, which all display *some* level of athleticism. The CT 200h, on the other hand, managed to be noticeably slower than the Prius when I drove it last summer.

      I also would have to disagree with you that the entry-level-luxury game comes at the expense of prestige among the Germans. It’s still painfully obvious whether you’ve bought an inexpensive German luxury car or a “real” one. What’s more, the people that buy the E-Class and S-Class and such will continue to do so. Since a lot of those customers are more interested in the actual merits of the car, it won’t matter to them that they have to share the three-pointed star with owners of sub-$40K cars.

      • 0 avatar
        SELECTIVE_KNOWLEDGE_MAN

        That’s odd. I find the NX200t base price to be $35,405.

        The CT was the entry level car I was referring to, since it is the only one with a base price less than $35k. I have driven the A-class, 1-series and A3 and fail to see how the CT is less of a good driver than the German rivals other than the hybrid drive train – which is why I mentioned that it needs the new 2.0t.

        I have also driven a Prius. It did feel faster than the CT in a straight line, but the driving dynamics couldn’t be more different. The Prius felt clumsy while the CT felt normal – just like the German competitors.

  • avatar
    kvndoom

    I’ve learned more about pie and beer from this than cars. Ha!

    I love an Edwards Lemon Meringue pie. Not a fan of lime.

  • avatar
    ajla

    Oh Lord, won’t you buy me a Mercedes Benz?

  • avatar
    Big Al from Oz

    I do think it’s good business by the more prestigious marques to have product to attract the potential future big spenders.

    What the prestigious marques need to remember is to provide good service along with these cheaper vehicles.

    The add bonus of this is the wealthier retiring baby boomers can down size. The wanna be “nickel millionaire” can go out and buy one to impress his neighbours so they think the person is successful.

    Good move. This will squeeze some of the more traditional manufacturers of everyday hacks and generate competition from them.

  • avatar
    friedclams

    Perusing these comments, I realize that since I’ve been reading TTAC (2008), the wit and wisdom of the B&B have reached an absolute high-water mark. Someone should hire actors to read the comments aloud and then turn them into a podcast.

  • avatar
    bumpy ii

    “Luxury sales have increased as products have become affordable to a wider audience.”

    That worked for Cadillac for a while in the ’70s.

  • avatar
    MRF 95 T-Bird

    I have yet to see a CLA vs Cimmaron comparison. After all they are based on A and B-class models. I do see plenty around in the NYC area. They are usually driven by Millennials who said “Hey it’s sporty, has the 3-point star and is the price of an Accord/Camry. Though every time I hear one accelerate it sounds like a Evo or WRX with less refinement.

  • avatar
    Carrera

    Lots of Chinese students where I live drive these entry level “luxury” vehicles. Actually, there is a strict nomenclature based on the parents’ status back home. Rich Chinese parents send their children to attend school in Canada and USA. As soon as they land, the kids go straight to dealerships and based on economic prowess of their family they purchase anything from BMW X5 to X1 or Mercedes CLA. Another very popular model with factory owners’ kids is the Porsche Cayenne Turbo. There’s a very simple hierarchy. Daddy has big successful factory means kids will drive Cayenne Turbo or Mercedes G-Wagen. If a small factory, then X1 or CLA.
    If they are sent to USA or Canada by their government with a scholarship, then the bus/bicycle it is. There isn’t much in between. It is either German luxury vehicle or the bus. Due to historical conflicts, the Japanese luxury brands normally are not bought at all by Chinese kids, or if they are, the numbers are insignificant. I know it sounds like overgeneralization but…


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