31 July 2014

Diluting Exclusivity

Is Mercedes taking the wrong road with such models as the CLA?

Why do people buy premium marques? Because they represent value for money? No, because they not. Are they more reliable? Lexus and Jaguar are, but for most part they are not really any better than some mass market brands. The reason is they represent prestige, they are something to be aspired to. They let others know you are successful.

So why are the German premium marques pricing some of their models very close to everyday brands? As they fight to win a sales race for bragging rights to be the biggest premium car maker. In the short term, people who never thought of buying such cars with their upmarket image are finding them increasingly attainable.

In the longer term, the brand's status must be eroded. That affects the whole range too. If you buy an S-Class for example, you want it to be special. It isn't if models lower down the range are selling not far above Ford prices. The marque becomes simply a brand, as its aura is lost.

No, the fight to be the biggest in the premium segment will have casualties. The most significant will be the loss of prestige for those who venture too close in price and quality level to mass market cars.

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