Are The Luxury Brands At Risk Of Diluting Brand Value For Market Share?

Too late -
Just look at the sales of those Premium vehicle makers - and you will see that it is the smaller cheaper cars that sell in numbers. And they have a real hard time selling the most expensive cars in the lineup.

Actually its the SUV sales that are keeping them afloat, looking at the major premium players here in the USA, it looks the only models getting positive sales are SUVs. LEXUS is lucky to have the NX, AUDI the Q5 and so on. SUV/CUVs is the segment that is growing.

Although BMW sales are still undeniably led by the 3/4 series - My point was that these manufacturers are selling the new - smaller - cheaper VEHICLES (Both Suvs and cars) rather than the high end luxury or premium cars. (I would not limit the sales to the USA based on the question)

In the mid size area - higher end Honda Accords, Toyota Camrys, Fusions, Malibus - etc - are now pricing into the mid $30,000 range - where the new smaller Premiums (Like the CLA) are. Now - I admit that the non-premiums are bigger - have more rear seat room - larger trunks - and are a better choice for a family vehicle - people will but a CHEAP Mercedes(BMW, AUDI) to be able to brag about it. But eventually - as PUGPROUD says - it will not longer be special to own one. Even independents will have them.

When every Tom, Dick, Harry, Jane, Susan, etc has one they are no longer aspirational brands and thus no longer considered a luxury. When a pimple faced kid with his hat on sideways is in front of you for service and holding you up the 1%ers will be moving on to Bentley, Maserati, and Porsche and eventually Lambo's and Ferrari's who will follow with SUV's and Sedans eventually.

As long as the luxury brands continue to develop and expand their upper-end products, then the lower-end models will have minimal impact on reputation. If anything, it may lead to a stronger long-term outlook due to buyer loyalty and movement upmarket within a brand or within the luxury sector. I'm not sure many owners would be readily willing to move from a luxury brand to a non-luxury brand, especially if they have growing income.

They all have by releasing cheaply made 'entry' cars for the masses that have damaged the brand name and reputation.

If one want a car for the masses, one would be a Kia or Hyundai.
Buying a cheap MB or BMW shows you are a frustrated wanna be unhappy with your life.

I am not so sure, BMW, Audi, Mercedes have been releasing stripper versions of their cars for years in Europe we, in the USA, are used to getting the better cars for our market. In some cases we got some of the lower end cars as well such as the 318i models back at least into the mid 90s. On the other hand I do think manufacturers that have something they are well known for (Merc Engineering, BMW ultimate driving machines, Audi…4WD Volkswagens with leather etc…) and should strive to uphold those values or attributes and BMW moving into FWD with the 2 series is a mistake IMHO. If they need to develop a Toyota brand do it with a whole different brand… I know they own a bunch of old English brands so maybe resurrect one of those. Same with Merc, they should meticulously engineer every car they make… over-engineer them and justify the premium over similar sized cars from other makers.

Premium brands that are not "insulated" by a large mainstream brand run the risk of getting pushed out of the market.

That is why Mercedes and BMW have gone down market. Audi has had no choice but to follow, but it doesn't need to because it's insulated by VW.

The ONLY shot Alfa Romeo and Maserati have of being healthy is the insulation of Dodge/Ram/Chrysler sales in North America propping them up.

I predict the 1 Series BMW sedan will be quite good. The CLA--which I find ugly--is a good vehicle.

BMW is on game with its tie up with Toyota. And with Toyota having Subaru and Mazda tied to them, there's a lot of insulation going on.

Mercedes went stupid with Renault-Nissan, but they probably had no better move.

Hyundai-Kia would have been the better choice as H-K is on game, but Mercedes committed mala figura with H-K. More than likely H-K wants nothing to do with Mercedes after it ran like hell when the "merger of equals" went instantly sour. The plan was for Mercedes-Chrysler, Mitsubishi, and H-K to share engineering of engines, but H-K ran like hell from it.

I'd say yes. Cars like the E320 W124 was an incredibly special vehicle in 1995, its last year. It was seriously expensive but also the last of the "cost is no object" engineered Mercedes Benz cars. You could probably drive that car into a bridge support and walk away from it? The current crop are excellent cars, no doubt and "sales" are off the charts. But, they're good, expensive cars. Most Mercedes cars come with MB-Tex interiors and to me, that's not luxury. Competition has changed the face of truly exceptional mainstream luxury cars and as they move down market, they'll find buyers, but the REAL luxury, a car that will last forever, like Mercedes cars of the 60's - mid 90's, Id say that era is gone. Especially as Matt points out, the Tie-Ups will make the lower line cars less special. They'll have to be as I seriously doubt any car company can exist only making cars that are $60K++ without a partner and moving down market.