Many young consumers today are famously uninterested in car ownership. It’s just too expensive and too much of a hassle to own a car, they think, especially given the growth of the sharing economy, when everything from cars to designer dresses can be rented with ease. And if owning any old car is viewed as a pricey, unnecessary burden, then buying a luxury car would seem to be especially out of the question.
But what if upscale luxury cars didn’t come with what we normally consider to be upscale, luxury prices? To attract new customers—younger ones especially, folks who tend to not have much money—Mercedes is introducing a new CLA class of vehicles. You’ll be hearing all about them in a marketing push beginning on the Super Bowl, when Mercedes will run an ad featuring swimsuit model Kate Upton, though the cars won’t hit the U.S. market until the fall. Prices will start at around $30,000.
“We are going to offer people a whole new way to enter the Mercedes family,” Joachim Schmidt, head of sales and marketing for Mercedes, said, according to the Detroit Free Press. “It will be much more attainable … and win over customers who never thought they could consider a Mercedes.”
Mercedes must also know that by offering cars for $30,000, it may also lose out with customers who might have otherwise spent $50,000 to drive a Mercedes. So is the downscaling a sign of desperation?
Actually sales in the luxury car category were up last year. Mercedes-Benz sales increased 13%, about on par with the luxury segment as a whole. Even so, the automaker lost the luxury car sales crown to BMW, which boasted an impressive 26% increase in new-car deliveries in November, compared to a rise of just 5.7% for Mercedes.
What’s more, now that seemingly middle-of-the-road cars like the Ford Fusion come with sport-stitched leather trim and 10-way power seats, the line between mainstream and luxury vehicles is blurring. A consumer in the market for an upscale ride often isn’t looking just at Mercedes, BMW, and Cadillac. There’s also a good chance he’s considering a high-end Ford or Honda, or even a Hyundai. Luxury automakers are being forced not only to compete among themselves like usual, but with higher-end versions of mainstream sedans, commuter cars, and crossovers at the same time.
Brands like Mercedes and Lincoln are also wisely concerned that their core group of customers is old and, quite literally, disappearing. Lincoln is trying to woo younger car buyers with the likes of the MKC Concept crossover. But instead of using the Mercedes strategy of aiming for the younger, less affluent consumer, Lincoln is hoping to attract buyers who are not only younger, but also richer than their current clientele. As Automotive News reported:
The average Lincoln customer now is about 65 years old, with a household income of about $100,000 annually. The new “progressive luxury customer” the brand wants to woo averages about 57 years old with average household income of more than $150,000.
OK, so even if Lincoln’s “youth” movement works, the average Lincoln driver still won’t be very young. What’s also interesting is that the MKC will share the same platform as the Ford Escape, a crossover that starts at a bit over $22K and most definitely hopes to appeal to younger, less affluent consumers.