Want a Luxury Car? They’re Getting Cheaper


Between our stressed economy and the Cash for Clunkers program, it seems that consumers have more and more reasons to turn to less expensive, more fuel-efficient cars when they are looking for a new ride. That trend could be problematic for the luxury car makers of the world ... but they are not just standing idly by.

Cadillac, Lexus and BMW are looking to break into the more-affordable, so-called “entry-luxury” segment, with scaled-down versions of their now-ample offerings, according to The Wall Street Journal.

Price Cuts and Shrinking Cars

Toyota’s (Stock Quote: TM) Lexus brand has already cut the price of its RX SUV by $900 down to $36,000, even with added technology and trimmings in its 2010 model. And on top of that, the luxury automaker expected to reveal a new compact concept car at the Frankfurt Motor Show next month, the Journal notes.

In addition, a compact Cadillac (Stock Quote: GM) ATS is expected to launch sometime after 2011 and a hybrid BMW should be out by the end of this year.

In this economy, even well-off car consumers have finally been turning away SUVs, says the Journal, possibly for the same reason they might opt for unmarked shopping bags when they go on shopping sprees.

Expanding Technology

The popularity of SUVs has historically padded the coffers of both car and gas companies, but to gain the appeal of the under-35 crowd as they downsize, fuel efficiency and technology are being stressed over size.

For example, Ford’s (Stock Quote: F) luxury Lincoln brand has been focusing more on technology over muscle, and Audi has plans for a diesel version of its small A3 hatchback, which can get about 40 miles per gallon, the Journal reports.

But beyond drivers hit by every uptick in gas prices, more comfortable consumers are turning to smaller, more fuel-efficient cars as well, the Journal contends.

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