Guess What? Cheap Cars Don't Hurt Luxury Brands

I still remember when the original Mercedes A-Class came out and changed the world as we know it. The year was 1997 – and while I may have been just nine years old, I consumed automotive media back then at approximately the same rate as I consumed fruit roll-ups.

For those of you who don't have the privilege of remembering the A-Class's debut, allow me to walk you through it. Mercedes-Benz – then known for manufacturing luxury sedans, luxury coupes, luxury convertibles, luxury wagons, and black limousines with little flags on the front bumper for oppressive dictators – decided it needed to increase sales. So they came out with a small, front-wheel drive hatchback known as the A-Class.

Well, this didn't go over all that well with the automotive press. If I remember correctly (and I don't, because I was nine years old for God's sake), these were a few of the headlines when the A-Class was first revealed:

Tiny New Mercedes Is a Huge Embarrassment to S-Class OwnersMotor Trend

Stupid New Mercedes Looks Suspiciously Like a DoorstopCar & Driver

No Oil Wealth? Even You Can Now Afford a Mercedes! Oppressive Dictator Monthly

The general feeling was that the A-Class would ruin Mercedes' reputation. Here was a company, famous for building high-end cars that everybody wanted to own, coming out with a tiny little hatchback designed to compete in a segment where "Party" is an acceptable name for a trim level. It was, according to the automotive press of the day, luxury brand suicide.

Well, guess what? It's been almost 20 years since the A-Class first went on sale, and 10 years since the arrival of the slightly larger B-Class. They've sold millions of units. They switched the styling from "wedge" to "car." There's a version that has – this is the truth – eighty-nine horsepower. And in spite of all that, an interesting reality has emerged: Mercedes-Benz is still famous for building high-end cars that everybody wants to own.

Yes, that's right: the little A-Class, the tiny car that the magazines predicted would be luxury brand suicide, had absolutely no effect on the desirability of the Mercedes-Benz brand. S-Class buyers kept buying S-Classes. E-Class buyers kept buying E-Classes. SLK buyers kept applying makeup on the highway. The world kept turning.

Interestingly, it's the same story throughout the luxury brand realm. For example: Land Rover – well known to be my favorite car brand, even though Land Rover PR guy Stuart Schorr once called me out in a Jalopnik comment – had no problem selling six-figure Range Rovers even after they came out with the Freelander, which was little more than a run-of-the-mill compact SUV with a) an upscale badge, and b) rampant transmission failure. And we all seem to let BMW get away with leasing the 3-Series for $299 per month to newly graduated sorority girls-turned-PR professionals, so long as they keep building cool stuff like the M5.

So how does it work? How can a luxury brand Dip its Toe into the Lucrative Pool of stupid metaphors downmarket cars and get away with it? How can they sell zillions of copies of these cars and keep their reputations? HOW, DAMMIT?? HOW?!?!? Well, I'm glad you asked, because I devoted considerable thought to this topic while I was in the shower this morning, and I've come up with… dun dun dunnnn…

Doug's Three Rules of Luxury Automakers Going Mainstream

Rule 1: The mainstream car has to be good. If you're a luxury brand, you can't go mainstream with a piece of crap. I can think of two examples where luxury brands did this, and both failed miserably. The first is the Cadillac Cimarron, which was a rebadged Chevy Cavalier they tried to force on people in the '80s. This car was so awful that it singlehandedly destroyed Cadillac's reputation to the point where the only people who wouldn't put up a fight when you made them get in a Cadillac were riding in back, in a coffin.

Number two: the Jaguar X-Type, which represented the low point of Jaguar's long, slow decline – a decline that began years earlier when they came out with the XJS, which featured unusual styling, a strange interior, and panel gaps the size of a lawn tractor.

So if you go mainstream, as a luxury brand, you have to do it right. Here I'm thinking of the Range Rover Evoque, which features unusual styling, and a Ford engine, and a Ford platform, and yet still manages to be cool, probably because it hasn't been out long enough to have any major electrical issues.

Rule 2: The mainstream car has to be more expensive than its rivals. One major reason why the A-Class didn't destroy Mercedes' reputation is that they didn't try to compete head-to-head with other hatchbacks. Instead, they entered the hatchback realm and asserted the A-Class's dominance by using the Typical Mercedes Product Strategy: pricing the vehicle way above its competitors, even though it isn't any better.

The result here is that the car still isn't available to everyone. Oh sure, we all know that the A-Class is cheaper than your average Room & Board bedroom set. But it's still an object of lust to compact car shoppers, because it's more expensive than their vehicle. Ask a compact car shopper, and they'll tell you they can't wait for the day they can afford an A-Class, but right now they're stuck with this Peugeot 106 0.7-Liter Party. And thus, the allure of the three-pointed star continues.

Rule 3: You still must build good expensive cars. Here's the real key to the whole thing: if you're running a luxury brand and you want to launch a mainstream car, you have to keep building the stuff you're known for. And you have to build it well.

Here I'm thinking of the time Porsche launched the Cayenne, which was met by more whining than a Christmas morning where one sibling gets fewer presents than the other. It was a travesty, according to the purists, and dozens of RennList members asserted they would never buy a new Porsche again, before realizing that the newest Porsche they own is actually a 1974 model.

But it turned out that the Cayenne was actually a sign of good things to come. Within a few years of its debut, Porsche had built a V10-powered supercar. It released the 911 GT2 and GT3 in the States for the first time ever. And it put a roof on the Boxster to form the Cayman. The end result was that Porsche purists ended up welcoming the Cayenne with open arms, and after a few years they even started leasing them for their wives.

So, luxury automakers: ignore all the doubters. Mainstream sales won't ruin your image. Just follow my three brilliant points, and you can do all the $299 lease deals you want. The general public will still think you're the "ultimate driving machine." Even if most of your customers are driving your machine between Starbucks and the mall.

@DougDeMuro is the author of Plays With Cars. He owned an E63 AMG wagon and once tried to evade police at the Tail of the Dragon using a pontoon boat. (It didn't work.) He worked as a manager for Porsche Cars North America before quitting to become a writer, largely because it meant he no longer had to wear pants. Also, he wrote this entire bio himself in the third person.