There is an automotive cold war going on. BMW and Mercedes-Benz are locked in a battle for luxury supremacy.

Having flooded mainstream markets for years, the two German brands are expanding into niche segments in search of more sales with models like the BMW 6 Series Gran Coupe and Mercedes-Benz’s upcoming BMW X6 fighter. But these segments will only result in miniscule returns. BMW and Mercedes-Benz want more volume and the answer, it seems, is downmarket.

Having sold smaller, front-wheel drive models in other corners of the world for decades, Mercedes-Benz recently introduced its new CLA-Class entry-level model to North America. Based on the same architecture as the B-Class, the CLA is a four-door “coupe” that mimics the larger CLS-Class styling in a vehicle slotted below the compact C-Class sedan. Not to be outdone, BMW has also introduced a new entry level model this year, the 2 Series. Replacing the 1 Series, the new coupe is larger, more practical and more refined than the outgoing model.

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But arms races are nutty. Not happy with just the potential sale gains these two new models should offer alone, BMW and Mercedes-Benz want more. Each nameplate also includes a performance variant that not only expands the vehicle’s range, but also allows customers a new, cheaper entry into German luxury performance.

Packing more power

With the CLA 45 AMG, Mercedes is offering a true AMG model, complete with hand-built engine, at a much more affordable price. Using a 2.0-liter turbocharged four-cylinder like the pedestrian CLA 250, the AMG version injects automotive human growth hormone to generate 355 horsepower and 332 lb-ft of torque.That makes this engine the most powerful production four-cylinder on the market today and can rocket the baby Benz from 0 to 60 MPH in a scant 4.5 seconds.

To achieve this feat, the CLA 45 is capable of sending power to all four-wheels via a seven-speed dual clutch automatic transmission. Sending 100 percent of the power to the front wheels normally, the instant slip is detected the CLA can send upwards of 50 percent of the engines abundant power to the rear wheels when needed.

SEE ALSO: 2014 Mercedes CLA 45 AMG Review

The BMW, on the other hand, is a more traditional sports car. With rear-wheel drive and a standard manual transmission, the M 235i employs BMW’s 3.0-liter turbocharged straight six with 320 hp and 330 lb-ft or torque. Featuring the smoothness only an inline cylinder configuration can offer, drivers who don’t want row their own gears can opt for the M 235i’s eight-speed automatic. It may not be an actually BMW “M” model, but it’s close and is far cheaper than any M car in BMW’s portfolio.

A Tale of Two Transmissions

Despite having more power and a quicker shifting dual-clutch transmission, we would gladly take either BMW unit over the Mercedes seven-speed. It’s not just that we prefer manual transmissions, either. The Benz gearbox is a poor dual-clutch while BMW’s six-speed is a terrific manual. Even the eight-speed automatic in the M 235i is a better responding gearbox.

We complained in the past that the CLA 250 transmission is jerky, unrefined and even unpredictable from time to time. Worst of all, there is an annoying delay from the moment the accelerator is hit to the time it takes for the car to get rolling. With the AMG-modified CLA, we hoped these issues would be tuned out, but they haven’t.

In fact, the highly boosted engine exhibits turbo lag of its own and the delayed sensation is even more pronounced. Short of performing a brake stand, leaving from a dead stop with any haste does not occur and the M 235i always feels more responsive.

Clutch feel with the BMW is dialled in perfectly. It isn’t too aggressive and offers great feedback as to where the exact engagement point is. The shifter slides between gears smoothly and we never missed a shift. Sliding past first gear into reverse is a little bit too easy. In fact, we did that more than once.

Smaller Engine, More Efficient

With a smaller engine, it’s no surprise that the CLA receives higher fuel economy ratings of 23 MPG in the city and 31 MPG on the highway compared to the M 235i’s ratings of 19 MPG in the city and 28 MPG on the highway. Our real world mileage closed the gap as the Mercedes-Benz returned an observed 23.3 MPG, while the BMW achieved 21.8 MPG.

SEE ALSO: 2014 BMW M235i Review – Video

Aside from a kill-joy transmission, the rest of the AMG is package is quite nice. Once under boost, the car rockets forward and sounds great while doing it. The turbo can be heard at all times spooling up and fluttering away excess boost. The exhaust is loud under acceleration, producing hearty barks when up-shifting. As pleasing as this engine sounds for a small four banger, the BMW’s sweet six pot blows it away. Making the shrill noise that only an inline-six can, the 3.0-liter turbo generates just enough sound to please you at all times without become bothersome or overbearing.

Engaging vs Numb

Both cars come equipped with high-performance summer tires capable of generating heaps of lateral grip. Although maximum velocity through a corner would be similar between the two cars, the feel is completely different. The M 235i wants to be thrown into corners, begging to be pushed hard at all times. The heavy steering provides plenty of feedback and the chassis is dialed in the way we’ve come to expect from sporty BMWs. This may not be an official “M” car, but it’s damn close.

On the other hand, the CLA 45 AMG feels numb and isolated. Although wholly capable, it reminds us of its bigger brother: CLS AMG 63. A rocket ship in a straight line, it feels less inclined toward spirited driving through twisting roads, even if it can handle it.

Distinct vs. Ordinary

Being a luxury sports car is one thing, but looking the part is also important. To separate the AMG apart from lesser CLAs, Mercedes has added a few visual cues. There is a front lip spoiler, matte gray trim bits, a large rear diffuser and quad-tip chrome tailpipes. If that is not enough there are more option packages that can add carbon fiber pieces and painted calipers.

Unlike the CLA, the M 235i does not differ much from lesser 2 Series models as it looks like a low and lean sports car right out of the box. With twin kidney grilles and the new quad halo headlights, the car is instantly identifiable as a BMW. Of course, there’s an M2 coming at some point and it will probably match the CLA 45 AMG blow for blow in design eccentricities.

Compare Specs

vs Vehicle 2014 BMW M 235i Advantage 2014 Mercedes-Benz CLA 45 AMG Engine 3.0 L Turbocharged Inline-6 - 2.0 L Turbocharged Inline-4 Horsepower 320 hp CLA 45 355 hp Max. Torque 330 lb-ft CLA 45 332 lb-ft Transmission 6-Speed Manual - 7-Speed Dual Clutch Auto Fuel Economy 19 MPG city / 28 MPG hwy CLA 45 23 MPG city / 31 MPG hwy Weight 3,505 lbs. CLA 45 3,494 lbs. Rear Legroom 33.3” M 235i 27.1” Rear Cargo Capacity 13.7 cu. ft. M 235i 13.1 cu. ft. Starting Price $44,025 M 235i $48,375 As Tested Price $51,600 M 235i $55,925

Two Doors More Practical?

And that brings us to the question of practicality. It would be easy to assume the four-door car is more spacious and practical than the two-dour, but that is not the case. With a miniscule 27.1 inches, the Mercedes-Benz gives up nearly six inches of rear legroom to the BMW. Headroom, although closer, still favours the BMW by nearly an inch in the back seat.

Even with an extra set of doors, getting in and out of the CLA second row is an exercise in flexibility as the swoopy rear end style creates a low roofline that requires passengers to duck down when entering and exiting the car. This stylish backend also affects trunk space as the CLA gives up 0.6 cubic feet of space to the BMW’s 13.7 cubic foot total. The Mercedes does trump the BMW in total passenger capacity as one extra person can theoretically squeeze in.

Hurting the CLA AMG further is pricing. The M 235i begins at $44,025 after destination charges, which is significantly lower than the Mercedes’ base price of $48,375. Even when loaded up, the BMW’s as tested price of $51,600 still undercuts the CLA’s as tested price of $55,925 by over $4,000.

The Verdict

If style and fuel economy are high on the priority list, the CLA 45 AMG may be worth it, but if you’re more interested in affordability, practicality and superior driving enjoyment, the BMW M235i is the easy choice. But, if you’re in the market for relatively affordable German luxury performance, pick the BMW.