Report: Lexus Won’t Build Sub-$30K Mercedes-Benz CLA-Fighter

Although the Mercedes-Benz CLA-Class has taken off in its debut year, Lexus will not dip its toes in the sub-$30,000 entry-luxury pool.

"We will not head down below $30,000," Lexus general manager Jeff Bracken told Automotive News. "We have Toyota and Scion to handle that price level for us."

Lexus’ cheapest car is the Lexus CT200h, which has sold 13,284 units through eleven months of 2013, down 17.7 percent from last year. The 2014 Lexus CT200h will cost $32,960 after delivery, and feature minor updates as well as a small facelift.  The 2014 Mercedes-Benz CLA250 starts at $30,825 after destination.

Since its release in September, the Mercedes-Benz CLA-Class has sold 10,828 units, helping Mercedes-Benz emerge as a favorite for this year’s luxury sales race.  Pricing for the entry-level 2014 Mercedes-Benz CLA250 starts at an attractive $30,825 after shipping, which is part of the German automaker’s strategy to reel in younger buyers looking to gain access to a luxury brand.

Mercedes-Benz year-to-date sales have increased 12.2 percent, to 306,898, compared to 2012. Lexus has fallen behind that volume with 239,090 vehicles sold through November 2013. The German automaker planned for a more affordable model to help lure in new customers and keep them within the Mercedes brand.

Bracken points out, however, that we don’t know how loyal Mercedes’ new customers will be. At the same time, Mercedes-Benz has shown with initiatives like the MB Select program that it is willing to invest in keeping these new customers around.

Only time will tell, but the good news for three-pointed-star fans is that initial numbers indicate that the CLA has not weighed down Mercedes-Benz C-Class sales. On the contrary, Mercedes-Benz has sold over 7,000 more vehicles through November 2013 than it did at the same time in 2012, which represents a 9.6 percent growth. While three months of CLA sales are too few to mean anything down the road, as of now it looks like Mercedes-Benz hit a home run with the CLA.

Lexus’ strategy moving forward appears to concede top luxury-sales honors, a title which it held for 11 consecutive years until 2011. Instead, Lexus will focus on higher-margin vehicles that maintain a perceptible gap between its premium offerings and the lower-market Toyota and Scion lineups.

"By not diluting its brand image, Lexus will stay focused," Toyota Motor Sales U.S.A. senior vice president Bob Carter told AN. "It lets Lexus hit on higher levels, in segments more traditionally associated with luxury."

In terms of mass-market volume, Toyota is already well-established among the biggest names with 1.7 million Toyotas and 63,998 Scion vehicles sold with just one month left in 2013.

Despite the fact that Toyota sells plenty of cars below $30,000, margins are not nearly as high as those for luxury nameplates. It’s also difficult to imagine a customer considering a CLA to opt instead for a well-optioned Toyota. The fact remains that Mercedes has found a corner of the market in which Toyota and Lexus aren’t competing.

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