Base MSRP $35,170
All powertrains are accessible
Potent turbocharged V-6
Luxurious look and feel
Intuitive and easy-too-use infotainment system
Thirsty turbocharged four-cylinder engine
Visibility hampered by its styling
Tight rear seats
Awful nighttime visibility
Of course BMW had to make it on the list with its 3 Series, but it’s surprising that it sits behind Audi, Lexus and Lincoln models. In years past, this would be blasphemy, but that’s the way the luxury segment has shifted lately.
While the 3 Series does have a slew of powertrain options available, including a diesel and a few potent V-6 models, the only one that falls under our $40K limit is the 320i and its 180-horsepower 2.0-liter four-cylinder engine. This engine does leave a lot to be desired, but you’re still getting BMW quality and handling.
Base MSRP: $34,900
Available all-wheel drive
Good fuel economy
Tight rear seat
Not as refined as some competitors
Advanced safety features are expensive options
Funky gear selector
Fifth on our list, we have our second Audi model. This time around, it’s A3.
While its big brother, the A4, knocked it out of the park in almost every category, the smaller A3 has a few hiccups here and there. It starts with powertrains that leave a little to be desired, like the 189-horsepower 2.0-liter, and continues with a tight cabin with limited wiggle room.
That said, you’re still getting a great luxury car at a bargain with the A3.
Starting MSRP: $31,950
Feels luxurious, even with its low price
Comfy front seats
Leather upholstery is standard
Tiny rear seat
Feels a little too much like a VW Jetta
Looks are bland at best
The most intriguing part of the S60 is its lineup of impressive engines, but to fit under our $40,000 budget, we have to limit it to the 240-horsepower T5 powertrain. Though it is the least powerful of the group, it is still nothing to turn your nose up to.