When it comes to the compact-luxury vehicle market, the incumbent best-seller has long been the BMW 3 Series. It was this market that General Motors (NYSE:GM) tried to disrupt when it revealed the Cadillac ATS, a smaller, more compact Caddy that was intended to go toe-to-toe with the Beemer, and regain some market share on behalf of the struggling American luxury vehicle market.
While the new Cadillac arguably evens the playing field on many levels, there’s one factor that the ATS has had difficulties competing with — price. According to Edmunds, research studies have shown that the average transaction price on the ATS was $39,459 through the first six months of the year, compared to the $44,764 commanded by the 3 series, Auto News reports.
In addition, the ATS also had steeper incentives placed on it, at $4,088 per unit, in contrast to the $3,555 for the comparable BMW. While some might say that a lower price tag for a comparable car could be seen as better for the company (better value, more accessible to a greater number of people), the pricing differential in this case points more to the disparity between the BMW and Cadillac, and the latter’s struggle to close it.
BMW has long been seen as a premium brand, particularly in the United States. While Cadillac has been GM’s top-of-the-line product for decades, the brand lost its cachet through a series of corporate blunders that labeled Cadillac as a badge-engineered Chevy in a new suit. As of late, the company has been fighting back hard to shake its sleepy, boat-like image in favor of one worthy of a true global luxury contender.
However, the new price data indicates that Cadillac still has ground to make up in regards to how buyers view the brand. The $5,300 difference in sticker price for an otherwise comparable vehicle signals that BMWs can still command a higher premium, and offer a “greater scale to invest in broader lineups that command higher prices,” Auto News points out.
The gap also points to BMW’s edge in brand cachet, despite critical praise for the ATS, according to Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. ”It shows what German engineering and the strength of the BMW brand is buying them,” he says.
However, while the 3 Series is the benchmark for luxury compacts, the ATS is more competitive when compared to others in its class. The sedan was within about $1,000 of Mercedes-Benz’s C-class sedan through the first six months of the year, and even commanded more than the Audi A4′s average transaction price by about $2,000.
Dealers have noticed that the ATS has been luring younger buyers into its showrooms, something the ATS was intended to do in the first place. While Mike Ettleson of Ettleson Cadillac-Buick-GMC in Chicago has taken trades of Lexus vehicles, Acuras, and Mercedes, BMWs are still somewhat elusive.
While the ATS is “comparable in size and price and handling” to the BMW, Ettleson says, “I think you’ve got to give that buyer something extra to get them to make that jump.”
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