First, in Germany, at least in Bavaria, BMW has long sold non-luxury level cars, just on the top end of "mainstream" since the E30 and similar era cars took BMW from more of a small producer of luxury and sporty cars to mass market luxury sport oriented brand. When you look at what engines they put in their 3-series sedans - I owned a "lightly used" 1997 316i in 2017 while stationed in Germany, for example, it's apparent that at least in the home market, BMW didn't need a mainstream brand, between the lower powered "stripper" 3s, German vehicle laws that disqualify poorly maintained vehicles from being roaded, and the export market.Mercedes and BMW don’t have the ability to rebadge mainstream models simply because they don’t have a volume brand to pull from. They would if they could.
For its part, Alfa Romeo found out the hard way that much of what it thought was pent up demand turned out to be nostalgia. Nostalgia alone is not enough when the time comes to convince luxury buyers to sign a 3 or 4 year lease, no matter what the auto magazines think.
As for Alfa, I think there was more demand until Alfa stepped on it hard by not having a solid reintroduction. But no, probably nothing like they forecasted.