Why Are The German Luxury Automakers The ONLY Ones Stealing Sales From Mass Market Rivals?

I think it has more to do with the fact that mass market consumers can't afford cars.

Marketing

Majority of people like to "buy up". Secretaries go to Marshalls to buy designer clothes at discounted price, same thing with cars. As long as these German cars offer attractive leasing terms and their base model 3, C and 4s are about 10% premium to top-level Hondas, Toyotas, Fords, many people forego the features and go after the luxury name, even if they don't have as much features. That's my guess anyway.

Uh. They seem to be the ONLY luxury makes who are building tiny cars.

Good point. The paradigm in the USA market in particular is that if you want something nice, you're forced to buy nothing less than a 40ft long land yacht.

Imagine my surprise when recently looking at a new vehicle...until I realized that it was literally too big to fit comfortably in my garage bay.

-hh

I'm sure that some people will say that it is because these makes are going "Downscale", with products in the near/sub $30K price point, but this really missed the point IMO: the average price of a new car has been continuing to creep up (which narrows the price gap from the likes of Honda) and the economy's been pretty poor since 2008 (so consumers have become a lot more value concious) and some lower entry price points all equals greater opportunity for these marques to grow.

The bigger question is if this will be sustainable for them, or if they'll mess it up: consumers coming over from Honda/Toyota have pretty high expectations of customer service ...and perks... which will require the German dealerships to be able to follow-through to have a happy customer _after_ the initial showroom sale over in the Service Dept.

...but what has happened in the past is that these prestigue marquees treat these new incoming customers with their entry level products like dirt...presumably because the dealership perceived that these customers weren't profitable *enough*. Yes, this is stupidly shortsighted (future sales...hello?), but I've seen it happen more than once, unfortunately, and from a personal morals standpoint, seeing a derrogatory attitude towards a paying customer simply because they weren't profitable enough is revolting: I'll quietly disappear and take my business to someone who respects _all_ of their customers, regardless of their station.


-hh

One Word: PROFIT.

The German 3 understand that the only way they will win the battle for the title of "World's Best Selling Premium Brand" is by increasing sales.

A good way to achieve that goal is to introduce low-priced, high-volume and low margin vehicles such as the Mercedes-Benz CLA, Audi A3 Sedan and BMW X1.

There are only so many models you can create within a $40-60K price range before your customer base peaks. To grow sales you need to enter new market segments that give you exposure to a greater customer base.

Sure, going down market will dilute their brand image and profit margins, but it will increase sales.

Rolls-Royce and Bentley are also guilty of doing this.