Whether it's about performance, luxury, or fuel economy, BMW is about A+ engineering. Why kid ourselves into thinking that a company that's trying to run a business would want to pander their products to some "exclusive demographic"?
I admit that when I was growing up, BMW carried this stigma as being an elite club to me, but it all went away when I test drove one and fell in love with it. Now I have appreciation for well-engineered cars and now only want to drive cars as such! BMW cars consist of quality and value, and the company is good at what they do!
Do I think this brand is being "diluted"? Well, I don't care because I WANT more people to be driving well-engineered cars whether it's because of the brand name or because they appreciate quality. It only raises the bar for all the other car companies. Why should anyone owning a BMW need to think they are somehow particularly special? We shouldn't because it only feeds to the image that we're stuck-up douche bags.
P.S. I'm Asian. I do realize that I'm kind of a stereotype in the Bay Area owning a BMW, but let's not hate or hurt one another.