Lux for Less: Mercedes Reaches Out to Young US Buyers

Mercedes-Benz is reaching out to young American consumers, offering luxury for less.

A major part of the strategy, said Mercedes-Benz USA President Steve Cannon, will be a "significant" drop in the entry-level prices of Mercedes' AMG brand.

"We are looking to make our brand more accessible to younger buyers, to more buyers, recalibrate the perception of the Mercedes-Benz brand," Cannon told CNBC's "Squawk on the Street" on Wednesday.

He said his company is also rapidly expanding its product offering. "Our product pipeline for the next seven years will have a new car launching every three months. Mercedes-Benz is in the middle of its biggest product offensive in its history," Cannon said at the New York International Auto Show. "Product is really what drives the market."

Also at the show, Toyota USA's chief Jim Lentz said the American auto market is growing stronger, but the future is less certain, in part because of regulation.

"We're seeing an overall industry that is improving," Lentz told CNBC.

"This industry is pretty simple: It's driven by interest rates and consumer confidence. Interest rates are at record lows and consumer confidence is improving," With the average age of a vehicle on U.S. roads is 11 years, Lentz said, he sees "a lot of pent-up demand."

"We still have cars at historically low prices, relative to income levels," he said. "Today, I'm very comfortable that the average buyer will afford a car. I'm a little more concerned as we move later into the decade." Lentz cited regulations like corporate average fuel economy (CAFE) laws as a contributor to rising auto prices, and less demand, in the future.

On global factors, Lentz said Toyota insulated itself from troubles with the Japanese currency by moving manufacturing and parts supply to countries like the United States. He estimated that Toyota will create 35,000 jobs in the U.S. in coming years.

Volkswagen of America CEO Jonathan Browning told CNBC he sees shifting preferences and potential in the United States.

"Hatchbacks and other body styles are vehicles that generate a lot of interest and a lot of enthusiasm in the market," Browning said. He added that Volkswagen has experienced a high pace of growth over the past few years but expects to see it "level off" although remain above the industry average.

Browning said VW is putting in place "the foundations of a much bigger business here in the U.S.," noting that the company has built new plants in North America and introduced new products in the U.S. market. One of the trends he mentioned for U.S. consumers is an increased adoption of diesel-fueled cars.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul