Cheap Jaguars? Luxury Volkswagens? Automakers Go High and Low to Expand Brand Appeal

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It’s a topsy-turvy, muddled time in the auto business, as Volkswagen plans on selling a vehicle priced like a Jaguar—and vice versa.

According to Reuters, sources indicate that Jaguar, the luxury auto brand known for high-performance $50K+ sedans and high-end two-seater sports cars, will soon try its hand in the mid-priced entry-level luxury car market. No official announcement has been made concerning pricing and models, but if Jaguar follows the trend established by Mercedes, BMW, and Audi, it’ll aim to hit the sweet spot of roughly $30,000 for a vehicle featuring decent levels of amenities and luxury—but without the typical luxury car sticker price.

Land Rover, Jaguar’s sister brand, has enjoyed strong sales for its lower-priced Freelander and Evoque small SUVs. (In this case, “lower-priced” means starting at around $40,000.) Now, it appears as if Jaguar will follow Land Rover’s lead, with one or more vehicles that’ll cost a fraction of the usual Jaguar. An official announcement is expected to be made in September at the auto show in Frankfurt, with mid-priced Jaguars anticipated for the 2015 model year.

“It’s a logical idea to use the momentum from Land Rover and expand the Jaguar range,” IHS Automotive research director Christoph Stürmer said to Reuters. “Jaguar is less than half the size of Land Rover so they need to do something, plus investors will like a move downscale.”

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At the same time that luxury brands are dipping their toes in the mid-priced mass market, at least one decidedly middle class brand is reportedly making a push upscale. Bloomberg reported that Volkswagen has plans to broaden its reputation as a maker of mid-level commuter cars with the reintroduction of the Phaeton. The model was first launched in the early ’00s, with Car and Driver and others noting how odd it was for Volkswagen—which translates as “people’s car”—to be marketing a vehicle for high-end buyers, with top-of-the-line Phaetons listed for over $80,000.

Underwhelming sales caused Volkswagen to pull the Phaeton from the U.S. in 2006. The vehicle will return to the U.S. as soon as 2014 as part of a broad push by VW to increase sales. “A brand as large as Volkswagen needs a halo project in the upscale segment,” chief executive officer Martin Winterkorn explained to Bloomberg. But critics think that the problems that Volkwsagen initially encountered when marketing an $80K car in the same showroom as Jettas and Golfs starting under $20,000 haven’t gone away:

The return of the Phaeton “would be a bad decision,” said Jesse Toprak, an analyst for TrueCar Inc., which tracks U.S. auto sales. “No one spends $80,000 on a Volkswagen. The company already has luxury brands that can cater to that segment,” such as Audi.

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Luxury automakers face a different problem as they try to reach cheaper price points. Mercedes, for instance, should be able to appeal to younger, less well-off customers with its CLA class starting at around $30,000. But by doing so, Mercedes, as well as Jaguar, BMW, and others going downscale, run the risk of seeing their usual customers begin wondering why they’re paying $60,000 or $70,000 when there are luxury vehicles out there from brands they trust selling for half that.