Affordable luxury, or luxuriously affordable?
Lines blurring between entry-level and premium automobiles
2011 Murano CrossCabriolet, a luxurious four-seater convertible that Nissan refers to as its "segment buster," became available this spring with a price tag of $46,390, significantly higher than an entry-level Nissan Versa at $9,990. (May 6, 2011)
Or is it the other way around?
Today's new-car market offers a panorama of models priced between $20,000 and $30,000 that in many respects can compete with gleaming, leather-appointed luxury models with significantly higher price tags.
Luxury car makers are talking about moving into this segment while builders of cars once thought of as entry-level are already there. And thinking about moving farther up.
"There is a blurring in both directions between premium and affordable models," says Jeff Schuster of J.D. Power and Associates. "For example, brands that weren't linked to premium cars now are offering highly-contented models."
The luxury car makers like Mercedes-Benz already have a wide band of European products which would make it feasible to bring smaller, less expensive models to the North American market, Schuster adds.
Regulatory pressures in Europe and the U.S. are pushing all auto makers to build smaller, lower-emission, more fuel-efficient cars, adds Jeff Hill, of Boston Consulting Group's Los Angeles office.
"And there's a need to get global scale on those investments, given platform economics," Hill says.
Customers are likely to benefit from the increased competition.
"There are many buyers with high enough incomes to afford luxury brands who choose to buy volume brands with luxury feature content and options," Hill says.
The 2011 Murano CrossCabriolet is what Nissan refers to as its "segment buster."
The luxurious four-seater convertible is available this spring for a cool $46,390. That's a far cry from an entry-level Nissan Versa sedan that starts at $9,990.
"We anticipate couples with older children still at home to choose this as a second family vehicle," says Kelly MacDonald, a senior marketing manager with Nissan in Nashville, Tenn. It is likely to draw from Murano owners who are looking for luxury features like leather, satellite radio, the intelligent key without having a luxury nameplate on the outside.
Kia, another maker with a reputation for marketing affordable cars, has been piling technology and options on its midsize Optima sedan. A 2011 Optima EX, with a base price of $22,495, offers a premium package with panoramic sunroof, heated outboard rear seats and a heated steering wheel plus a navigation system with back-up camera, real-time traffic updates and upgraded sound system that bring the pre-delivery price to $26,745.
Kia, often viewed as the maker of econobox transportation for first-time new-car buyers, says the average age of its customers is 53. Forty percent are college-educated, two-thirds are married and average household income is $63,353, according to R.L. Polk & Co. figures.
Polk named Kia the "most improved" brand in customer loyalty in 2010, when the Korea-based company enjoyed record sales and its 16th consecutive year of market share growth in the U.S.
Luxury car maker BMW is getting budget-conscious customers hooked on its products through a successful pre-owned vehicles sales program.