E-mail updates
Follow on Twitter
Subscribe to RSS
ka.plewka
The 3-Series is far and away the best-seller for BMW.
By Paul A. Eisenstein, msnbc.com contributor
When Mercedes-Benz pulls the covers on the all-new A-Class hatchback during the Geneva Motor Show this March, car buyers will get a glimpse of the changes rapidly sweeping through the luxury car market.
The pint-sized Benz clearly doesn’t fit the classic mold. Americans, in particular, have always defined luxury cars by the inch and pound, with some of the most memorable models from Detroit stretching over 20 feet, nose-to-tail. And there are products that hew to that classic image, like the 3-ton Rolls-Royce Phantom.
But in today’s world even luxury buyers are well aware of fuel costs and crowded urban streets. That’s especially true in markets like Europe, where downsized models have been gaining traction for more than a decade. But manufacturers are betting that even in the U.S. the mantra for many luxury buyers is now “small is beautiful.”
Certainly, the market for so-called entry-luxury offerings has never been more substantial. The 3-Series is far and away the best-seller for BMW, much as the A4 is for Audi.
“What defines luxury has been evolving,” says Rebecca Lindland, chief researcher for IHS Automotive, who adds that Americans are beginning to catch up with global trends.
Compact models, such as the A4 and 3-Series, appeal to a wide range of buyers and for a number of different reasons. For some they are the affordable entry point into the luxury market. For others they are all you need “to get the luxury look and conveniences you want,” Lindland added.
With all the varied offerings, old and new, in the BMW line-up, from the X3 crossover to the flagship 7-Series, the “3-er” is by far the best-seller, generating 94,000 unit sales in 2010, or roughly a third of the brand’s total U.S. volume. That’s down about 7 percent from the 101,000 BMWs sold in 2010 -- but it’s no surprise, given that the current 3-Series was in its final year, the automaker unveiling an all-new version at the 2012 Detroit auto show in early January.
Indeed, the annual event was chock full of entry-luxury models, including not only the new BMW, but also a replacement for the Audi A4 and an all-new compact luxury model from Cadillac, dubbed the ATS.
The Germans shouldn’t be complacent when it comes to Caddy’s chances.
“I think the ATS is going to be very competitive,” said Joe Phillippi, chief analyst with AutoTrends Consulting, adding that the car is “spectacular.”
The new model slots under Cadillac’s existing CTS -- which will now move slightly up-market, targeting the BMW 5-Series. If the General Motors brand is on target, the ATS could soon become its best-selling product line.
But the ATS will find tough competition coming from sources other than Germany. Lexus fields a pair of offerings in the segment, the IS and ES lines, which collectively generated 71,000 sales last year, about 2,000 more than the Mercedes-Benz C-Class.
No product line arguably underscores the changes that have swept through the luxury market in recent decades. It took several years of debate before the carmaker grudgingly brought to market the so-called “Baby Benz.” It proved far more successful than initially anticipated, appealing to both young buyers and to those who wanted a more fuel-efficient alternative after the twin oil shocks of the 1970s.
These days, the C-Class lags well behind its Bavarian competitor, “reflecting the problems Mercedes is having, in general, connecting with young buyers,” says analyst Lindland.
Stan Honda / AFP - Getty Images
Upscale sedans, electric vehicles and old-school muscle cars make their debuts at the 2012 North American International Auto show.
Appealing to the next-generation “will be critical,” suggests Clay Dean, head of GM’s advanced design department, because getting a young buyer in early improves a brand’s chances of keeping them around as they grow older and choose to trade up -- although it’s a matter of debate whether “millennial” buyers will follow the traditional “bigger-and-better” path of older generations.
That’s why carmakers like Mercedes are looking at even smaller offerings, such as the new A-Class, which will be the Teutonic carmaker’s first model based on the new MFA (“modular front architecture”) platform for compact luxury vehicles. According to Daimler AG’s CEO Dieter Zetsche, as many as five different Mercedes product lines will likely share that platform, including the only slightly larger B-Class.
Meanwhile, as part of an expanding series of joint ventures, the MFA platform will be shared with the Euro-Asian Renault-Nissan Alliance. It will first appear under the sleek skin of the Infiniti Etherea -- a production version of the concept vehicle that was a smash hit at last year’s Geneva Motor Show.
In a quid-pro-quo, Nissan will provide a new generation of small, high-mileage four-cylinder engines for the next-generation Mercedes-Benz C-Class. That updated sedan will go into production in 2014 at Mercedes’ Tuscaloosa, Ala., assembly line.
That, in itself, is a significant move, as lopsided exchange rates are a serious problem for both European and Asian importers. The weaker dollar compared to the yen and euro has made it difficult to generate a profit importing even small luxury models. That could give a leg up, for once, to Cadillac, with the ATS, until foreign carmakers can shift production to their U.S. factories.
The alternative would be to walk away from what is, by all expectations, likely to be the fastest-growing segment of the American market.
That’s a strategy that would cause more problems than it solves. While it remains unclear just how small is too small for American luxury buyers -- the success of the new A-Class anything but certain -- there’s no doubt that the battle for the entry-luxury buyer with products like the 3-Series, A4 and ATS only now heating up.
Related:
Leave a Comment:
It's about time we get with the program
Program or progrom?!
No mentioning of BMW 1 series?
BMW considers the 1-Series--except for the coupe, which was designed with the US market in mind--as too small for American buyers. Besides, BMW already has a small car model brand in the US market: the MINI.
Ray I'm not sure where your getting that from. I've seen the 1 series being driver all over the place. I love my 7 and don't want to drive anything smaller than a 5.
I test drove a 116 in Australia years ago. Great little car but expensive (run flat tires cost a fortune) and too similar to the Mini. Also no rear seat leg room due to the rear wheel drive setup.
The Caddy ATS might very well be an exceptional vehicle, compared to it's European competition, but...........IMHO, I think that the sheet metal styling is just HoHummmm...out of step with the other brands. It's styling looks sooooo "yesterday", or is it just me? LOL!!
BMW sells more 7 series than 1 series.
The 1er is a well kept cult secret in the US. Those that know, know. Those that don' or need more room choose a 3. New 7 and 5 are huge cars. Even the 6 is not much fun to drive unless one thinks of it as a German Thunderbird. Competent, yes. Fun, no.
@Ray_Chung: I agree that BMW unfortunately thinks that 'only' the 1-Coupe is suited for the US market - - I'd much rather have the hatchback version (and 4 doors...the current 1's back seat is simply unusable) because it gives me a more flexible ...while still 'fun'... vehicle, without having to resort to some ungainly SUV behemoth.
Perhaps I need to go gain 40lbs to become more like the obese American stereotype demographic to refine my whine for not fitting into bucket seats, or of "too low" cars (from having a low center of gravity).
In the meantime, the other part of the challenge is to manage the price-value equasion so that the vehicle's MSRP isn't higher than what I first paid for our house!
-hh
One of the reasons these "small" cars are selling well is that car makers keep making them bigger. The 2012 BMW 3-series is now as large as a 5-series from two generations ago - the E39. (Built from 1995-2003).
So, this shouldn't come as a shock to anybody who keeps up on the car industry. These models are selling well now because they have grown to a size Americans are comfortable with.
Soo true! A new 5 series parked next to my 7LI and was just as big!!
As your ego?
Not sure what your getting at. The fact I drive a big car has nothing to do with my ego. Take your dumbass comments and keep it to yourself.
LMAO
Rich people don't want small cars. It's the rich-wannabe's and the nearly-rich who are gobbling up these glorified econoboxes.
You don't know what you're talking about.
There is more than one type of car among the wealthy, but small cars have always been involved in some capacity. The largest cars can be found driven by the nouveau riche, who for all intents and purposes are not considered to be part of the establishment.
There is a distinction between new money and old money. Flamboyantly large and obnoxious vehicles are the domain of new money.
Of course, those who come from money don't consider the nouveau riche to be "rich people" anyway, since they are the real "rich wannabes."
Don't get stuck on the rich angle. A huge percentage of Americans thing driving a small car is unpatriotic, unsafe or Euro/feminine/socialist. The US car industry can take a large part of the blame for this. Fat America and a 'might makes right' mentality is responsible for another part.
The person who thinks a stripped down, light weight, no frills rwd roadster like a Miata is a 'chick' car is often the person who thinks a 7 liter, 3 ton, heated leather seats, power everything, crumple zone on wheels with a scratch free bed is a "Mans" car.
When really it's the only thing that will haul their 280 lb self from drive thru to shooting range and back.
I dissagree. Where I come from, old money folk drive the large luxury types, and not the "flamboyant" style either, of course 'flamboyant' is a relative term.
Bentley's, large Mercedes, BMW's etc., in my humble opinion, can hardly be described as 'flamboyant', but more along the lines of, understated elegance. They don't whine, but purr....softly.....
Along side the nice, small, sports cars, for many. My point was not that we hate large cars, but that we don't dislike small cars based on some "econobox" notion.
This is flamboyant to me: Hummer
It screams "I need attention."
I love my small cars. There's just something to say about being able to fit places.
It's all about price, folks. With the economy in the tank, price is king. Watch, if the econ grows, so will the appetite for larger cars, i.e. BMW 5 and 7 series, at least in the US.
I love my large cars, with hundreds of ponies dancing under the hood - 400 minimum. The room to stretch out without breaking a rear seat passengers leg, the low growl coming from under the bonnet, and lots of room in the boot, to boot!
A long time buyer of Volvo V70/XC70s, I noticed that my latest XC70 feels more like a full size car. Would gladly downsize to V60, especially the diesel hybrid variety, but it's not offered in the USA :(
The V50, with all due respect, feels too smallish, and not offered with AWD anymore (again, only in the USA). Do the Swedes think we have no winter here?
You mention a valid point. No diesel available. Too bad. Diesels are far more efficient than their gas brethren, one point that the Europeans have managed to appreciate.
Think how much fuel we could save if, for instance, GM put a 6 cylinder diesel in their SUV offerings, not just the full size pickup! Of interest as well, is the EPA requirements for diesels....fuel economy has actually decreased with the increase in smog equipment. Can't win for losing.
Anonymous: My wife bought a V70 about 10 years ago. We used the factory delivery program (totally super!) and asked if we could get a stick shift because the car was purchased and initially driven in Sweden. The answer was a firm "Nej" because they wouldn't export any standard-transmission models to the US.
Boom: On a trip to Paris I rented a medium-sized car with a 4-cylinder diesel. There were zero problems with noise, smell, or exhaust smoke. Highway fuel consumption was about 4.7 liters per 100 km which translates to roughly 50 mpg. If even the FRENCH can build a car that gets that sort of mileage but we can't, we're in bigger trouble than we're willing to admit.
Not only the rich wannabe's are buying the cars but you have dad buying the car for jr. Most of these drivers are driving daddy's car since he is the one who paid for it and decided to buy it for his son. Remember the Slogan of Saleen in the mid 90's Power in The Hands of a Few! Now Saleen's are everywhere but they are no longer made by Steve Saleen. Kids are driving 50,000-100,00 dollar cars.
several years ago, I was involved in a bad auto wreck. 5,000 pounds of steel prevented a long hospital vacation perhaps even "DEATH". This is why I don't want to drive an economy car that gets 40 mpg.
Absolutely. Weight saves lives. Good for you for thinking smart. :)
Yeah, but weight also KILLS people.
With high strength steel, carbon fiber and aluminum components, even magnesium castings, sheer tonnage is no guarantee of survivability. Some of the old American 60's and 70's sedans were indeed heavy and "wrapped in steel", but are death traps compared to modern designs.
Also, as the Europeans long ago discovered, maneuverability and braking are performance parameters that should not be neglected.
Exactly, I can dodge a crash better than an SUV can.
So can someone on a motorcycle but the when it happens the two wheeler is always on the losing end.
;-) DLB POST DELETED
There is no comparison between a car with a great crash rating, and a motorcycle.
Also, I don't need to worry about wiping out.
Your SUV is not nearly as safe as you believe it to be.
i have an 07 jaguar s with the 3.0 v6 engine and easily get 30 mpg on the highway. getting good gas mileage was not something i took into consideration when i purchased the vehicle but have to admit it was a nice plus and from a vehicle that is now five years old. so much for the "new" higher gas mileage sedans as they have been around for some time now.
Glad to hear that many in the U.S. are waking up to smell the coffee. For most people the huge, heavy, fuel sucking, vehicles are completely uncalled for. Todays small cars are a real pleasure to drive, easier to find a parking spot, and have better visibility than the big dinosaurs we see cluttering the parking lots. As far as performance goes my four cylinder Camry will out perform about six out of ten of the big whales.
Dave, the only thing your Camry will out preform is the MPG. I agree, a good small car makes a nice commute/easy on the wallet. But I still drive my 7 everyday and its way more comfortable than anything else ive driven.
I can't afford the BMW anyway, not that I would buy one. You can't carry my fishing gear in it either. I drive a Chevy Colorado. Small enough to get decent mileage (27 on the highway) and enough space to carry my gear. It's also quite fun to drive.
My other car is a Chevy Cobalt. Love that one too.
It will be a fashion thing. Large cars will be seen as 'grandpa' cars in a decade or so, cars for 'poor' people, the elderly and the obese. Large cars will become the automotive equivalent of mom jeans. Euro compact cars will be the thing to be seen in as large cars go the way of cigarettes.
I'll keep my Hummer, thanks.
I can't wait for the luxury version of Mercedes' Smart, or the next iteration of the Cadillac Cimarron, that overpriced Chevy Cavalier from the 70's.
Simple from my perspective on the car business for over 20 years, Big doesn't mean safer, yes you cant defy the laws of physics but if you have to ask, then all I can say is "go back to school, get a degree so you can buy a safe vehicle instead of a large one to justify your ignorance and ego" Now just about every vehicle is safe, have to be safe period, that's why they are heavy carrying all the restrain systems and passive equipment therefore use more fuel. About rich folks not driving small cars or big cars only and so on, if you have money, you buy whatever you like. On the neck of the woods where I live, old money drive conservative cars, many of them old European ones that have a clean service record, all the wannabe drive or lease newer vehicles and don't keep with any service at all. Only American lazy fat bastards will complain about small cars, you don't see all tall and big Germans or Swedes all driving on large cars in Europe? Even VW have to make a special Passat for US only that is bigger that the Passat sold everywhere else.
A vehicle purchase is an emotional and economic one, people should buy what the want but should need to me more educated on vehicle driving, etiquette and the vehicle itself, something that never gonna happen in the good ole USA.
We still gonna have fat lazy people driving suburbans instead of a minivan, even if it is a better vehicle just because is not cool, people buying or leasing vehicles that are beyond their means just to keep up with appearances and so on, the list goes on....
Yes, but like the US only large Accord, the Passat is a market failure everywhere else.
Love my Nissan hard body 5speed p/u with a tractor supply locking diamond coated tool box and steel rack . Beauty is in the eye of the beholder not the masses.
My wife's Ford Taurus is nice too. I will not lie and say i love or even like my Suzuki savage 650 but if i am down to one vehicle i will ride two wheels and leave her the car or truck .
Detroit has never had anything against small cars. They don't want to sell cheap cars, and Americans believe small, lightweight cars should be cheap. Haven't you noticed that when the price of small cars rises, the car becomes bigger and/or more powerful to imply greater value?
As far as reliability goes, BMW, Benz and Audi still suck, no matter what the size of the s--t box.
So many of my co workers say assembled in America not made. Big deal , Korea and Japan build cars in the south because we have right to work states and are not poisoned by the U.A.W . I do not know anyone in Michigan anyways. If there willing to build here in GOD's country then they got my vote and i vote with cash.