The news marks a bit of a turning point for an industry that was founded on notions of exclusivity.
As entry-level prices drop, more and more car buyers can hope to buy a piece of fine German engineering, but the move does come with a few risks.
It used to be the case that owning a luxury car was something to aspire to. These days, luxury carmakers are even targeting millenials buying their first car.
“They’re more concerned about keeping you in the fold and making sure that there is something there for each of your life stages,” Huge Marketing Director Megan Malli says. “That’s really where they’re headed with respect to the marketplace.”
Lower starting prices and a broader range of models may translate into higher sales, but it also risks diluting the brand’s cache.
“They are now competing against the Hondas and the Fords of the world, and frankly, often those other vehicles can really beat them on options and pricing,” Malli says.
That’s where marketing strategy comes in to play. If would-be buyers still believe that BMW equates with say, “performance,” then being more mass-market is actually a good thing.
“They really preserve their brand messaging, even if they produce cars that are less expensive,” says NYU Stern School Professor Thomaï Serdari. She also notes that the German’s mass-market strategy won’t work for every luxury car brand.
“Cadillac is a brand that had a lot of cache a few years ago, but also it was associated with people of a specific type and background, perhaps much much older,” says Serdari.
In recent years Cadillac has had little to tout besides its high end Escalade SUV. In order to become relevant again, Serdari believes the brand needs to cut back its offerings, and go upmarket to firmly re-establish itself on the high end of luxury, a place BMW, Audi and Mercedes already occupy.
“Then perhaps they can reverse their strategy and start targeting the mass market with less expensive models.”
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.