Tuesday, August 26, 2014

Why Going Downmarket Doesn't Hurt

With the ability to get into a new Audi, BMW or Mercedes for less than the average new car on the market there has been a lot of chatter of the German 3 dropping down. Whether through underboosted engines or through physically smaller models the cost of entry is under 30,000 for two of them and the other gives you a 5,000 discount. With such a seemingly low price point many have wondered if the brands are diluting themselves and their heritage and if their top of the line models are still special. While some of the media has called out the brands the consumer has paid little attention. Neither the recently introduced A3 sedan nor the earlier debut of the CLA has hurt either brand's sales of its top of the line models. The people that are buying the flagship Mercedes and Audi models costing over 100,000 aren't concerned that someone else can buy a Mercedes or an Audi for only 30,000. As long as they are getting a product with power, design and technology commensurate with the price of admission the existence of an entry level model won't bother them. Even for the few status conscious that do want to show off how much their car is worth there is little to worry as it isn't hard to see that an S class or an A8 retail for a quite a bit more than 30,000.

As with everything there are practical limits and thresholds that shouldn't be breached but so far both Audi and Mercedes have introduced a new model at the lower end of their spectrum without missing a beat at the top. The second round is coming right up as both are introducing the crossover version shortly.

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