And so I ask you, after a day behind the wheel of a $33,900 Mercedes-Benz CLA sedan, what is a luxury car in 2013?
No one argues that Mercedes is a luxury brand. We can all agree on that. But when Honda sells a totally stuffed Accord sedan for $35,400 – I am left scratching my head. Does the CLA, this all-new $33,900 Merc, compete against the Accord and its ilk – loaded Ford Fusions, Hyundai Sonatas, Kia Optimas, Chevy Malibus, Nissan Altimas and so on? Or is it aimed at the least expensive versions of the BMW 3-Series and Audi A4?
The answer is yes.
Yes, the CLA is an Accord-fighter and, yes, it is a grenade tossed at the 320i ($35,900 base) and the A4 ($37,600 base). It's a jungle out there, and a jumble, too – a jumble of different makes and models moving downstream among the traditional luxury brands and up-market among the mainstream makers.
Mercedes thinks the CLA will reel in younger buyers and that could be even more true in the United States where the base price of the CLA is in sub-$30,000 territory ($29,900, to be precise). In Canada, the CLA enters the fray $3,450 less than the cheapest C-Class, the C250. The CLA isn't exactly luxury on the cheap, then, but it's certainly luxury on the cheaper – cheaper than any other sedan from Merc in Canada and much cheaper than the entry-level C.
Merc started heading down Affordability Highway years ago in Canada with the arrival of the B-Class wagon, which starts now at around $30,000. The German auto maker is doing this because it can – because it can go after buyers who want the prestige of a Benz. As auto analyst Michelle Krebs recently told The Detroit News, "once you've established high-end market, it's easier to go down-market."
Merc and other premium auto makers are going fishing in the pool of middle-class buyers in a concerted effort to grow beyond their baby boomer base. Boomers still rule the new-car market, but even though most of us boomers think this will never change, we're wrong. We're going to get old one day and, when we do, car companies need to have established themselves with up-and-comers. Even luxury car companies like Merc.
At this year's Detroit auto show, Mercedes USA boss Steve Cannon told The News that Generation Y – twenty- and thirty-somethings and such – will some day supplant boomers and Gen Xers as the dominant force in the car business. Mercedes, BMW and Audi and the rest need to start connecting to Gen Y now, not wait to seek relationships in a few years time.
This won't come as a revelation to a single car company. And that's why you will find a couple dozen sedans in the $30,000-$40,000 range. Some come from established premium brands such as Merc, and others come from relative newcomers, such as Acura, and still others come from the likes of Honda (I mentioned the Accord, correct?) and Ford (a loaded Focus Titanium with AWD lists for about $34,000).
Some buyers will find this a tad confusing. Yet the Mercedes brand, for one, has the pedigree to go for Accord and Fusion buyers without, Mercedes officials suggest, sullying the brand. Mercedes doesn't use the term, but other car company bosses have called what Merc is doing with the CLA and the B-Class "democratizing" the brand. Regular folk with mortgages and nasty commutes can now afford a Benz. That's the message Mercedes want you to hear, at least.
Look for this trend to accelerate. Nissan, which has high hopes for its Infiniti premium brand, and Daimler with Mercedes, will further reduce production costs by producing small luxury cars jointly as early as late next year in Aguascalientes, Mexico. The plant, notes just-auto.com, will go on-stream this year building Nissans first.
But that production line is destined to build small Infinitis and Mercs. If you thought the CLA was an affordable car payment, wait until Mercedes-brand cars start coming from Mexico, where wages and cost are low and a North American free-trade agreement allows for tariff-free access to Canada and the massive U.S. market, too.
Reuters, in fact, reports that the Mexican plant is expected to build a production version of the new Infiniti Q30 shown at the recent Frankfurt motor show. That compact crossover wagon will share engines and some chassis components with the Mercedes-Benz GLA also unveiled in Frankfurt, the report says. The GLA, which in turn shares a platform with the CLA, is expected for 2015, as is the Q30. And many believe the Mercedes will also be built in Aguascalientes.
For now, the CLA that Canadians are seeing in showrooms is built in Hungary and that means it is subject to an import tariff of about $1,800. If the CLA were imported from, say, Mexico, the Canadian sticker price might come in closer to the CLA base in the United States. In fact, Automotive News reports that Mercedes executives have said production of the CLA could shift from Hungary to Mexico when the compact sedan is redesigned in 2018.
Confused about luxury cars in 2013? Just wait until 2018 rolls around.
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