But now, BMW finally faces some credible competition. Its German rivals are back with far better vehicles starting at just under $30,000. The new Mercedes C-Class, which went on sale last fall, offers the kind of comfort and luxury you would expect from Mercedes, but in a sportier, more stylish package. And Audi is getting ready to introduce a larger, faster A4 sedan that's sensuous and sporty.
The Germans aren't the only ones getting into the act. Jaguar, Lexus, and Acura are all challenging BMW with new models aimed at younger drivers who crave comfort, performance, and of course, pedigree. Soon, Lincoln, Cadillac, and Infiniti will join the fray, too, making the low-end luxury car segment the most competitive in the industry.VOICE-ACTIVATED PHONES. Why so many new offerings? Luxury car buyers tend to be recession-proof, but unless dealers hook them early, it's tough to lure them away from their favorite brand. The intense competition means manufacturers are under pressure to hold down prices while loading up their vehicles with goodies such as navigation systems, electronic stability control, and voice-activated radio and telephone.
Most cars in the category start at a little less than $30,000, but the price can easily rise above $40,000 if you choose a more powerful engine and lots of the extras available. Still, in most cases, you can get a well-equipped vehicle for less than $35,000. With so many attractive features, you might wonder why anyone would spend more for a higher-end car. That's easy: These luxury compacts might be loaded, but some of them don't seem much bigger than a Honda Civic. So they're definitely not suited for families with kids.
My husband and I learned just how tight the C-Class is on a recent trip to Florida with our two children. We couldn't fit the stroller and all the luggage in the trunk, so my five-year-old had to rest her feet on the extra suitcases. Another problem was that after a couple of hours riding in the 10-way, electronically adjustable front seats, both my husband and I were complaining of lower back pain. It turns out our C320 didn't come equipped with an optional multicontour seat that includes lumbar support, which I highly recommend.
In every other way, the C-Class offers the kind of elegance and comfort you'd expect in a much higher-priced sedan. That includes genuine wood trim, rich leather seating, and an optional premium Bose stereo system. The C240, starting at $29,950, comes with a 2.6-liter, 168 hp V-6 engine and either a six-speed manual transmission or a five-speed automatic transmission with Touch Shift, which allows drivers to manually shift gears without using a clutch.
We tested the more expensive C320, (starting at $36,950) which features the Touch Shift automatic and a 3.2 liter, 215-hp, V-6 engine that accelerated briskly, tickling the back of my neck as we sped down Highway 1 toward Key West. Standard features include a telescoping steering column, electronic stability control, and eight airbags. For $2,190 extra, you can add an integrated, voice-activated telephone and CD changer. Ours featured a sunroof package for $1,340 that included a rain sensor (which turns the wipers on automatically when it detects sprinkles) and a nifty electronically controlled sunshade in the rear window that helped keep the kids cool along those Florida highways. Mercedes isn't done yet. Borrowing a page from BMW, it will soon start selling wagon and coupe versions of the C-Class.5-SPEED AUTOMATIC. Lexus is also going after BMW's youthful, sporty reputation with its new IS 300. Until now, the luxury division of Japan's Toyota Motor had only its Camry-based Lexus ES 300 to challenge the 3-series. And like most Lexus vehicles, the ES 300 is competent and well-made, but very dull. Not so the IS 300. Its exterior styling is aggressive and angular, but what really sets it apart is the interior. Not everyone will like it, but I think it's awesome. The most distinctive feature is the instrument cluster, which is styled like a chronograph watch dial. Admittedly, it's a bit tough to read the gauges, but I got over that quickly.
Other cool touches include drilled aluminum foot pedals, metal skid plates for the door sills, and a chrome-plated shift knob. Best of all, Lexus has finally brought some driving passion to its lineup with this sports sedan, which starts at $30,500. The IS 300 features a smooth, 3.0-liter, 215-hp, six-cylinder engine and--for now, anyway--a five-speed automatic transmission. (A manual version is scheduled to come out later this year.) On tight corners or bumpy surfaces, the IS 300's double-wishbone suspension and responsive steering keep the car on track. Even the color of the model I tested--solar yellow--screamed excitement.QUICK ACCELERATION. For car buyers seeking a bit more refined luxury, the new Jaguar X-type goes on sale this summer starting at $29,950. This compact is unmistakably Jaguar, with its sculpted shapes and powerful stance. And although we weren't yet allowed to test-drive the X-type, the car's V-6 engine and four-wheel drive system promise to deliver a potent combination.
The Baby Bimmer, redesigned in 1999, still sets the standard among entry-level luxury vehicles. Even though the Baby Bimmer's businesslike interior seems a bit dated compared to today's more modern styling, what matters most is the way that it drives. And the 3-series is a driving enthusiast's dream. It handles corners tightly, accelerates quickly, and stops swiftly. It's a car that begs to be driven. The lowest-priced 3-series is the 325i sedan, which starts at $27,635, but there are many derivatives of this vehicle. The most expensive in the 3-series is the 330Ci convertible sport model, which tops $52,000 fully loaded.
After all your shopping, you may find you still drive a BMW home from the dealership. At least now, if you do, it won't be for lack of other great choices. By Joann Muller