I've always chalked it up not as advertising but as branding. Those commercials serve to build a brand around a product and keep current owners involved in the brand, through feelings of superiority or whatever.
It's like CocaCola commercials: they don't need awareness through advertising, they want branding. Everyone knows what Coke is, but they want you to associate happiness with their product, so they keep branding.
So when I see luxury brands bashing each other, I imagine that's part of what rich people pay BMW and Mercedes for. For that feeling of "I'm better than you because I own X", which the brands deliver through marketing like this.
It's like CocaCola commercials: they don't need awareness through advertising, they want branding. Everyone knows what Coke is, but they want you to associate happiness with their product, so they keep branding.
So when I see luxury brands bashing each other, I imagine that's part of what rich people pay BMW and Mercedes for. For that feeling of "I'm better than you because I own X", which the brands deliver through marketing like this.