By Jerry Hirsch
4:20 PM PST, January 15, 2013
DETROIT — Fancy nameplates in the auto business are prepping for a bruising battle for buyers of entry-level luxury sport sedans.
At the North American International Auto Show in Detroit this week, the Germans and Japanese showed a flurry of new lower-end luxury models, which analysts say have big growth potential among cost- and efficiency-minded buyers who still want nicely appointed performance sedans.
The new crop includes redesigned versions of the Lexus IS line, the first Mercedes-Benz front-wheel-drive sedan for the U.S. market, Infiniti’s Q50 replacement for its G37 sedan and a BMW 320i, priced about 10% below where the current 3-Series line starts. Those join the previously launched Cadillac ATS, a rear-wheel-drive 3-series fighter already making waves and winning awards.
“We see a worldwide trend to smaller engines and smaller cars, even in the luxury market,” said Herbert Diess, a member of BMW’s Board of Management.
The car companies are all going for people moving up from functional-but-pedestrian cars such as the Toyota Camry, Honda Accord and Ford Fusion.
“We want to capture them,” said Mark Templin, Lexus group vice president and general manager. “Nobody in the luxury space gets a lot of customers from any other luxury brand. It just doesn’t happen that way.”
Lexus needs a winner in this segment. It has long trailed the market leading BMW 3-series sedans, and sales of the outgoing Lexus IS models fell 6.6% to 27,708 last year — even at a time when the Lexus brand overall grew 23%.
The jockeying in the bottom rung of the luxury market started even before the first curtain was lifted off a new model car at the North American International Auto Show on Monday.
Before the show opened in Detroit’s sprawling Cobo Center, Mercedes-Benz offered a private preview at a hotel of its CLA 250 — the least expensive Mercedes-Benz to be sold in the U.S. market and the first with front-wheel drive.
The CLA will slot below Mercedes' C-Class when it goes on sale in September with a base price of about $30,000, comfortably below the $35,000 starting price of the larger C-Class. Mercedes is trying to give the car a more expressive, aggressive look so that it doesn’t cannibalize C-Class sales.
“We think that a primary target for this are people in their 30s and early 40s,” said Steve Cannon, chief executive of Mercedes-Benz USA. “We want to bring new people into the brand.”
Not to be outdone, BMW used the first day of the show to unveil its BMW 320i, a lower-powered version of its bread-and-butter 3-series line that will start at $33,445 and go on sale in late spring. (The new Lexus and Infiniti sedans will go on sale this summer, but neither company has announced pricing.)
Although it will be slower than its siblings with bigger engines, the new offering will be no slouch, Diess said.
“The 320 is already a powerful car, the lightest in its segment,” he said. “It is agile and has good fuel efficiency, which is an advantage over the more powerful cars.”
On Tuesday, Toyota’s Lexus division unveiled new versions of its IS 250 and IS 350 with the promise that it has gotten the message from Akio Toyoda, the automaker’s chief executive back in Japan, to make the cars more fun to drive.
Finally, Infiniti showed off its new Q50 sports sedan, a replacement for the outgoing G37 from Nissan's luxury division. Infiniti, now run by a South African who once worked at Audi, believes it can steal customers from the old-line luxury companies.
“The German brands in particular are all occupying particular positions in the marketplace,” said Johan de Nysschen, president of Infiniti Global Ltd. “We would like to present Infiniti as the seductive alternative. We've got a strong reputation for performance, and we can deliver hospitality coming from our Japanese roots.... It's part of our DNA.”
Historically, the Germans, followed by the Japanese, have been the big players in this segment. But General Motors Co. recently make a bold statement in the same market, the Cadillac ATS.
The sedan, which has been on sale for a few months, grabbed its own attention at the show, winning the North American Car of the Year award.
“We didn’t compromise, and we demonstrated that we can compete in that segment,” said Mary Barra, senior vice president for global product development at General Motors. “We need to make sure the world understands what we have there, and that’s why winning the award was great. It will help tell that story.”
Barra concedes that the bottom of the luxury market, especially when it comes to sports sedans, is pretty entrenched.
“But I also think today’s consumers are looking around,” Barra said. “They are not letting anyone rest on their past.”
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