A bare-knuckles fight is about to begin for low-end luxury-car buyers. Most of the cars will be smaller, to boost mileage, and lower-priced, in an attempt to draw a new crowd of younger buyers who'll stay with the brands long-term.
"Everybody wants to have a [BMW] 3 Series," says Steve Shannon, U.S. marketing chief for Hyundai, which sells larger luxury models like the Genesis and Equus. "That is such a great spot to be in."
3 Series history
- Introduced in the U.S. as the 1977 BMW 320, the first 3 Series car immediately drew admirers for its then-uncommon blend of sports-car handling and sedan practicality.
- When the second-generation 1984 version of the 3 hit showrooms, upwardly mobile professionals thought they'd found the perfect wheels for their rising status.
- Now, the 3 series is BMW's best seller, accounting for 38 percent of the company's U.S. sales last year. A slightly larger, quicker, more fuel-efficient, sixth-generation 3 just went on sale, and it's better equipped than the car it replaces.
- The new 328 sedan is $35,795; the 335i is $43,295.
The 3, a compact sedan, is "small enough to be big-city friendly, but big enough to be adequate for people living elsewhere," says Jesse Toprak, an auto-industry expert at TrueCar.com. "It successfully and magically attracts demographics from other segments, everybody from twentysomethings to senior citizens."
The 3 Series' most likely new challenger is Cadillac's $34,000 ATS compact sedan, coming this summer. "They'll do very well with it," says Jim O'Donnell, retired chief of BMW in the U.S. and now an auto-industry expert at the New England Consulting Group. "I wouldn't be surprised if it became the No. 1-selling car for Cadillac. If I were a dealer, I'd be quite excited."
The ATS had to be "something Cadillac has never had," a compact high-performance sedan that can "finally challenge the German cars at their own game and win," GM's President of the Americas Mark Reuss said at the car's Detroit unveiling in January.
More out soon
Other challengers coming include the new Acura ILX and the redesigned Lincoln MKZ.
The ILX, due this spring, "effectively creates a new sporty compact segment on the leading edge of the luxury marketplace," says Acura design studio chief Jon Ikeda. Acura is Honda's upscale brand, and the ILX can be viewed as a premium takeoff on the Honda Civic, from which it is derived. As with the Civic, there will be a hybrid version.
The MKZ is a key element in what Ford says is the "reinvention" of its Lincoln luxury brand, with new and redesigned models. On sale later this year, the new MKZ will be longer and wider than the current version, though it still will be the smallest Lincoln. A hybrid model is expected.
Jim Farley, in charge of worldwide marketing, sales and service at Ford, says, "We hope to conquest new people, people who have never shopped a Lincoln before," by providing both a redone car and an improved dealership experience.
On the market
Already in the low-end luxe fight are the Buick Verano and Lexus CT 200h.
Enough buyers consider Buick a premium, or even a luxury, brand that its $24,000 Verano small sedan, launched in November, is on the entry-luxe radar in spite of its mainstream price. It lacks some upmarket features, such as a backup camera, but it could come across as a great bargain.
The CT 200h, an upscale gas-electric hybrid hatchback loosely based on the Toyota Prius, has been on sale for more than a year. It's the brand's newest and least expensive model, running about $4,000 less than the cheapest version of the small, sporty Lexus IS sedans that some would consider a more direct challenge to the BMW 3. But the CT's hybrid drivetrain, quirky looks, sporty chassis and $30,000 starting price are Lexus' attempt to seduce luxury newcomers in a new way.