Some elements that will affect how the battle plays out between low-luxury and high-mainstream models:
Regional preferences. "In areas such as L.A. and New York and big metropolitan areas, which are image-driven, the entry-luxury models do pretty well," says Jesse Toprak, industry analyst at TrueCar.com. Though it's less so in Middle America, the coastal ethic "puts a premium on the brand. People want to be seen in a BMW, in a Benz. Even though from a value perspective, you're better off getting a non-luxury vehicle."
That presages success for the new low-luxe entries because of the status badges they wear.
Toprak believes automakers are expecting regional strength rather than nationwide success and have factored that into their business plans.
"It's mainly to get people into the brands" in areas where they're likely to stick with those brands, he says.
Luxury backlash. "There are buyers who don't want premium cars because they come with premium maintenance, and a premium image that some people don't want," says Rebecca Lindland, director of research at consultant IHS Automotive.
Research by General Motors' Buick unit — which considers itself a luxury brand — found a deep pool of potential buyers who "were unpretentious. They were successful, could afford to buy any car they want, within reason. But they didn't want to make an overt statement," says Craig Bierley, Buick's marketing chief.
Buick hopes to be a home for those people it sees as luxury buyers in disguise, but others, such as Lindland, see them as more likely to opt for well-equipped mainstream models.
Premium purgatory. Lower-end models from luxury brands risk being considered not-quite-real-luxury; more like "premium." And that, at least according to Bierley, is "where brands go to die."
"You're either a luxury brand and appeal to those customers on the level of features and treatment they want. Or you don't. There's nothing in the middle," he says. That's why Buick decided to define itself as a luxury brand and match the way those brands operate — emphasizing leasing, for instance.
On the other hand, he sees no contradiction between small size and big image. "Luxury doesn't have to be big. Luxury is really a personal thing, how a customer defines it," Bierley says. If they are done right, the new small low-luxe models can upset entirely "the perception that if it's small, it can't be luxury."
Will size actually matter?
In the end, whether the small, high-mileage, highbrow, low-luxe cars have a future in the United States, and whether they threaten some mainstream brands' plans to get rich on high-end models, might depend on history more than anything.
Americans' historical preference has been and continues to be for bigger cars, for their greater comfort and ability to swallow the country's vastness in relative ease.
"No American is asking for a smaller car," says Hall, whether it's a silk-stocking brand or not.
"Americans want better fuel economy" and car companies that confuse the two — mileage and size — do so at their peril, he says.
The first manufacturer, luxury or otherwise, "that can make a midsize sedan, or one perceived as midsize, that gets 40 real-world miles per gallon on the highway, without being a hybrid, that's probably the guy who'll own the market."