Lexus won't chase Mercedes CLA with sub-$30,000 model

Lexus stays it will instead focus on more traditional, higher-priced luxury offerings.

Although many luxury automakers are turning to lower-priced models like the Mercedes-Benz CLA-Class to lure in younger buyers and boost sales, Lexus chief Jeff Bracken says the brand has no plans to follow suit with a new entry-level offering of its own.

Speaking with Automotive News, Bracken acknowledged that the CLA, a front-wheel-drive compact sedan that starts at $29,900 before delivery charges, has been a source of growth for Mercedes, but he said that Lexus won't field a comparably-priced competitor.

"We will not head down below $30,000," Bracken said. "We have Toyota and Scion to handle that price level for us.”

The CLA, which hit the market in September, has helped propel Mercedes to what will likely be its first year atop the U.S. luxury sales charts since 1998. Last month, Mercedes' sales climbed by 4,061 units or 13 percent to a November record of 34,376 vehicles, with the vast majority of the gain coming from the CLA.

"They are off to a great start," Bracken said "They are really doing well, and it has probably not only impacted their overall volume with CLA, but also brought in some traffic for some of the other series that they represent, and clearly helping drive the luxury segment in total."

Lexus' CT 200h, which starts from $32,050, is within striking distance of the CLA's price, but its hybrid hatchback configuration appeals to a significantly narrower range of buyers than conventionally-powered sedans like the CLA, the Audi A3 and BMW's upcoming 1-Series sedan.

Without a true CLA rival, Bracken acknowledged that the top U.S. luxury sales spot - which Lexus owned for 11 years through 2011 - would be "difficult” for the brand to reclaim in the future.

However, Bob Carter, senior vice president of Toyota's U.S. sales arm, suggested that part of the reason the German automakers are introducing entry-luxury models is to help meet upcoming CAFE fuel economy standards. Mercedes and BMW only have their relatively low-volume smart and MINI brands to help raise corporate mileage levels, while Lexus, due to Toyota and Scion, can largely forget about the efficiency regulations and focus on more conventional, higher-profit luxury models, Carter said.

"By not diluting its brand image, Lexus will stay focused," he said. "It lets Lexus hit on higher levels, in segments more traditionally associated with luxury."