Auto Brands Look to Woo Millennials with Entry-Level Luxury

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American Millennials are the apple of everyone’s eye in the auto industry: They’re the largest generation in the most reliable car market in the western world. And yet they’re proving to be the most elusive in terms of attaching themselves to brands and even to the idea of owning a vehicle.

So automakers are beginning to do some unprecedented things to reach them. Case in point: Toyota executives revealed at the ongoing New York International Auto Show that they’re considering converting Scion—which until now has focused on quirky designs and low prices to attract young buyers—into an entry-level “luxury” marque in a strategy that might enable the company to battle more effectively in that important gateway segment for upscale Generation Y buyers.

“Today it’s hard to find much value below $18,000 to $20,000” for a car, Jim Lentz, CEO of Toyota’s North Ameica Region, told Automotive News. “There’s going to be a big need in the $25,000 range for a fun-to-drive, nice-looking, value-oriented product.”[more]

Scion may be the brand Toyota uses to address that price segment, where Millennials are huge. That way, Toyota wouldn’t have to try to stretch the identity of its luxury brand, Lexus—which is very popular with baby boomers and older consumers—downward in price or figure out how to develop Lexus vehicles and a marketing platform to appeal to Millennials.

Such deliberations by Toyota in part are another ripple from the unveiling of a $29,900 Mercedes-Benz, the CLA during a Super Bowl ad; the entry of the German premium brand with a vehicle with a sub-$30,000 price point is a direct appeal to employed Millennials and a direct challenge to competitors.

Now, Mercedes-Benz has launched a social media campaign to attempt to sustain marketing momentum for CLA stretching to the September availability date for purchase. And it is partnering with filmmaker and social maven Casey Neistat to do so. The Millennial-oriented Neistat, who was involved with the Nike Fuel Band launch, will make a video project around CLA beginning this month, Marketing Daily said.

For its part, German rival Audi is teasing the introduction of its new A3 sedan, which will compete for Generation Y buyers with CLA. Sales of the A3 sedan—which will succeed the current hatchback version of A3 in the U.S.—will begin early in 2014. It will be the first Audi model to be equipped with a new infotainment system featuring the NVIDIA Tegra computing system, Automotive News Europe said. It will come with wireless 4G connectivity and an Audi “phone box” meant to boost the cellular signal. Such features are in demand by young buyers.

In the meantime, auto brands that already appeal to American Millennials are doing their best to keep out the new competition from luxury brands. For example, Honda has just announced that Maroon 5 will headline the 12th season of its popular Honda Civic Tour concert series. The effort will leverage the renewed popularity of the band generated in large part by the booming popularity of lead singer Adam Levine, whose gig on NBC’s The Voice has boosted his Q scores through the roof.

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