These cars yield big profits. As entry-premium sedans, they draw new buyers to the upscale brands. And the cars’ size and drivetrains generally deliver better mileage than others in the lineup, helping makers meet fuel-economy rules.
“They solve multiple problems for automakers,” says auto consultant Rebecca Lindland at Rebel 3 Media.
German automakers forged their standing in the U.S. with sport sedans such as the BMW 3 Series, Audi A4 and Mercedes-Benz C-class. On that foundation, European premium makers have captured more than 6% of the U.S. market, a lot for brands with nothing much priced lower than $30,000.
These cars are “terribly important, because they make these brands approachable. You might not walk into a BMW dealership if all it had were 5s and 7s,” says Gary Stibel, CEO of New England Consulting Group, referring to BMW’s bigger, higher-price models. “These cars are an opportunity to create a relationship, and if they manage it well, it’s an opportunity for a lifetime relationship.”
The cars now mainly target a group born in the 1980s and 1990s called Millennials, and described in a Pew Research study as “confident, self-expressive, liberal, upbeat and open to change … more ethnically and racially diverse than older adults.”
In Lindland’s view, there is another key attribute: “They have grown up with a premium mindset,” the children of a generation that made its way before the recent recession. They don’t see owning a luxury-brand car as special — though perhaps starting with used models and only now are working into new ones.
Sport-sedan buyers might not be driving enthusiasts, but like the sporty feel and image. “They still want to buy into the ‘street cred’ that European-style dynamics established,” says Edmunds.com analyst Bill Visnic.
That image status is key. Sport-sedan buyers “don’t drive cars, they wear cars and they are very conscious of what that says about them,” says Stibel.
Automakers can’t be cavalier about those buyers, though. Sport sedans are “getting squeezed by mainstream sedans that can be optioned-up with many of the same amenities and give a similar driving experience, at a much lower price,” says Alec Gutierrez, analyst at research site kbb.com.
BMW paved the way for this market segment with its 3 Series sedan, which remains a performance and status benchmark for the group. To see if the 3 Series still deserves that status, or whether European, Asian and U.S. sport sedan rivals have matched or passed it, we put six to the test on the street and on the track. Automakers could equip the entries as the liked as long as the cars had automatic transmission (which almost all Americans buy) and a price with shipping of $46,000 or less, a typical price being paid for these cars.
Here are the Challenge entries (in alphabetical order) and some impressions:
• Acura TL: Honda’s luxury brand favors practicality and front-drive, with performance-oriented all-wheel drive as an option. Many luxury makers think “wow” factor sells better than practicality.
First-quarter TL sales: 6,793, down 19.3% from a year earlier, according to Autodata.
As the only V-6 in the test, TL was a smooth highway performer, an easy-going suburban driver and quick on the track. In the track part of the test its power let it touch 100 mph on straights, but its relative heft made it trickier in the corners.
• Audi A4: Volkswagen Group’s luxury brand in the U.S., Audi has made good use of a marketing pitch that, for a long while, was basically, “Not a BMW.” It shares hardware with VW to keep costs down and favors front drive, though most of its models are equipped with its Quattro all-wheel drive.
First-quarter A4 sedan sales: 7,081, up 7.8% from last year, Autodata reports.
The A4’s 2-liter, turbocharged four-cylinder accelerated strongly. The super-traction summer tires (a no-cost option) on the test car delivered excellent braking and cornering at the cost of dramatic wear. A sparse, low-brow interior was its undoing.
• BMW 328i: The 3-series is the prototypical European sport sedan in the U.S. market. CEO of U.S. operations, Ludwig Willisch, says most 3 Series buyers don’t want the bigger, pricier 5 or 7 Series models. Rather, they want different, better, faster 3s.
First-quarter 3 Series sedan sales: 16,460, down 15.4%, according to Autodata.
The Challenge car had the M Sport package’s bigger tires and firmer suspension. They provided sharp handling, steering and braking without, surprisingly, a harsh ride. The car’s turbo four-cylinder felt stronger than its 240-horsepower rating and it topped the group in fuel economy.
• Cadillac ATS: Cadillac, the General Motors luxury brand, wants a slice of the 3 Series’ pie has and the all-new ATS is its pry bar. Caddy believes it can lure the proper buyers via its new, high-tech CUE control system.
First-quarter ATS sales: 9,750. (Not on sale a year earlier.)
ATS’ chassis felt engagingly well-balanced. The 272-hp turbo four-cylinder felt coarse on the road, however, and a bit underwhelming on the track for its power rating. Interior furnishings were high-class.
• Mercedes-Benz C250: The luxury maker often considered a synonym for “luxury” hopes to keep moving down in price and up in sales. Its newest sedan, CLA, starts at about $31,000, about $5,000 less than the base price of the C250 Challenge car.
First-quarter C-class sedan sales: 19,255, up 20.8% form a year earlier, says Autodata.
The C250’s 1.8-liter, 201-hp, turbo four was overmatched by the others undercutting the car’s “sport” credentials. Interior trim and comfort were top-drawer. Brakes on the tester were soggy-feeling and ineffective.
• Volvo S60: Volvo says it aims to “create the most exciting car experience for modern families,” rather than directly targeting sport-sedan Millennials, noting that one of its features will automatically stop the car before it hits a pedestrian. But the sporty S60 is the brand’s biggest U.S. seller.
First-quarter S60 sales: 5,947, up 0.1% from a year earlier, according to Autodata.
Volvos are based on front-drive architecture, but the test car had all-wheel drive. Still, at track speeds it seemed nose-heavy. On the street, it was not apparent. The S60 has a 2.5-liter, 250-hp. five-cylinder that seemed more than sufficient. Interior quality and design were top-fight and the ride was comfortable.