When the November car sales figures come out, one certain result will be that BMW, Audi, and Mercedes will post another month of double-digit growth. Perhaps the 1% or 5% of Americans feel much better about their financial prospects than the 99% or 90% do. Or, perhaps each of these companies has come down-market enough in models and prices to have maneuvered into the mainstream. If the second possible answer is true, many larger auto manufacturers have something to fear.
BMW’s sales for the first ten months of the year rose 12.8% to 240,139. Mercedes sales were up 12.6% to 262,123. And Audi, the laggard in unit sales, posted an increase of 13.4% to 127,412. The totals may not seem overwhelming, but among them the three sold about half of what Chrysler did for the same period.
Each of the three has started to sell cars priced as low as $30,000, making them within reach of a large portion of American consumers. That has allowed the three to draw some of the buyers of higher end Ford (NYSE: F) and Toyota (NYSE: TM) models into their more ambitiously drawn circles.
The new Mercedes CLA class model is well on its way to be the German car company’s best seller. It price begins at $29,900. That price point may be a cheap trick by an auto manufacturer to sell a sub-$30,000 vehicle. Based on early sales, the marriage of the Mercedes brand and the low price has worked. BMW has priced one version of both its 1-Series and 3-Series just above $30,000. Audi’s A4 model is priced nearly as low.
At first glance, it would appear that three companies have set their plans to take sales from the high end brands of Toyota (Lexus), Honda (NYSE: HMC), and Nissan (Infiniti). This could be an explanation of their strategies, but isn’t. Mercedes, BMW, and Audi have brought their lowest priced models under even GM’s (NYSE: GM) Cadillac and Ford’s Lincoln, each of which has failed to break into the highest end of the market. It is smarter to mark the plans of the three by pointing out that a Mercedes is now priced below a Chrysler 300C, which is rarely considered a luxury car at all.
Mercedes, BMW, and Audi have become more ambitious, and that means the market shares of companies with which they never competed have come under new pressure.
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