Mercedes-Benz, Luxury Automakers Encroaching on Mass-Market Segments

Ryan Joseph Ramos January 22, 2013

Mercedes-Benz is among the luxury car manufacturers that are introducing new entry-level models at a previously unprecedented value. The new Mercedes-Benz CLA is a good example of this new trend, seeking to capture a younger market that’s increasingly becoming more willing to spend for luxury brands.

With around 75 million slated to be in the 30- to 40-year-old age group in the US, there’s a lot of potential to cut into the market dominated in the past by mass-market manufacturers. Even when you consider that it’s a higher-end model of a mass-market brand versus an entry-level luxury vehicle, it’s easy to see why being able to offer luxury cars at this level would appeal to the aforementioned demographic.

“They have big expectations for products and brands,” said Bernie Glaser, the head of marketing for Mercedes-Benz USA. These expectations include having a good measure of the latest tech, the brand recognition, style, and features, and these should be at a certain price range. That’s why many luxury automakers are scrambling to come up with vehicles with price tags under $40,000. That kind of price isn’t too unreasonable, as it’s just a few thousand above tourers offered by the luxury brands’ mass-market counterparts.

“You could argue that people will say ‘For just a little more money I can buy a Mercedes rather than the touring version of the Accord that goes for US$35,000,” said Rebecca Lindland, an automotive analyst for IHS. “It presents a threat to the mainstream marketplace and it is becoming more socially acceptable to be in a luxury vehicle.”