[7] Bmw Stands For What In Daily Issue

"When we decided to open our own division in the U.S., that was at the same time that BMW released the most important car as a company," says Manuel Sattig, head of brand strategy in the United States.

The 3 series is the epitome of BMW's marketing as the ultimate driving machine "because it is related to that feeling when you shift the gears and that direct response of using the gas pedal -- it gives you that dynamic driving feeling," Sattig says.

Even Consumer Reports sings the 3 series' praises.

Jake Fisher, the magazine's director of auto testing, says: "It has for a very long time been The One. This is the small, fun-to-drive, luxurious vehicle, and it hasn't had a lot of competition for quite a while."

Lutz says a key to the success of the 3 series is that "it was always superbly engineered."

"It was engineered up to a desirable level as opposed to engineered down to a specific cost," he says. "People expected to pay more."

"That is where the slogan came from. The focus in marketing and the car was on vehicle dynamics, good brakes, sharp handling and good engine sound -- all of the things that provide gratification to the driver."

Urquhart of IHS says the competition has intensified in the last two decades, "but the 3 series is still the benchmark."

With the redesigned C class launched last fall, the Mercedes-Benz sedan "is beginning to close that gap" because of its "premium quality and equipment, and it is a far improved drive over its predecessor," he says.

Mercedes-Benz continues to maintain a price premium over the 3 series with the C class. The C300 starts at $39,325, compared with $34,145 for BMW's entry 320i. Both prices include shipping.

Heiko Schmidt, product manager for the C class at Mercedes-Benz USA, says: "We have come a long way in the last two generations. We closed the gap with the 3 series when you benchmark to powertrain, fit and finish and especially inside with quality."

In the coming year, the C class will get a coupe and convertible designed from the ground up, derivatives that Heiko says finally will put Mercedes on a more level playing field with the 3 series.