In the fall of 2010, then-BMW Canada president Franz Jung was preparing for the inevitable – the end of a nearly nine-year run as the No. 1 premium auto maker in Canada.
Sure enough, Mercedes-Benz Canada overtook BMW at the end of 2010, riding a wave of new models that among other things pushed Mercedes down into the minivan segment – the B-Class. Since then, Mercedes has accelerated the pace of product launches, emphasizing affordability, sport-utility vehicles, all-wheel drive, diesel and downsized powertrains. And Mercedes-Benz Canada has spent tens of millions renewing its dealer network.
In 2015, Mercedes-Benz Canada rode a 15.3 per cent sales increase to No.1 yet again, topping BMW Canada’s 6.7 per cent rise in sales, notes DesRosiers Automotive Consultants. More importantly, the Mercedes brand in 2015 stayed atop the luxury segment for the second straight year.
For BMW, this represents a loss of face. “Our position should be No. 1 or No. 2,” said Joseph in 2010, adding BMW should be No. 1 “because our customers want to buy success.”
Now after a decade at the top of the global luxury sales charts and as BMW AG prepares to celebrate its 100th anniversary on March 7, Mercedes-Benz is poised to seize the global premium sales crown.
Naturally, Ian Robertson, BMW’s top sales and marketing executive, is lowering expectations for 2016 sales.
“Success isn’t something you can measure by volume alone — a consistent and sustainable performance is also really important,” he told Automotive News Europe.
The truth is, “BMW has lost some of its dominance,” Stefan Bauknecht of Deutsche Bank’s DWS unit told Bloomberg.
In fairness, last year BMW topped all luxury brands by selling 1.81 million BMW brand cars. The Volkswagen Group’s Audi was second at 1.74 million, Mercedes third at 1.65 million. However, while BMW sales were up 9.5 per cent in 2015, Mercedes sales rose faster at 13 per cent and Audi was up 10 per cent.
So far in 2015, we’re seeing more of the same. Through January, the BMW brand fell to No. 3 among luxury brands, though sales were up 7.5 per cent. Mercedes surged 20 per cent. Audi brand sales, hurt by the ongoing VW diesel scandal, rose just four per cent.
Mercedes is enjoying success for the most obvious of reasons: product. Mercedes’ product pipeline has been loaded with new models, especially new SUVs such as the GLC and GLE, along with a new C-Class and more affordable models such as the CLA which opens up the Mercedes brand to Honda Accord-like buyers.
BMW, meanwhile, has invested heavily in what company bosses say is its long-range view of the marketplace. The poster child for that effort is the i8 supercar with its emphasis on lightweight materials and electrification. As a result, BMW’s mainstream, volume models have suffered for a lack of investment.
Even BMW’s efforts to improve fortunes with established models have been disappointing. Sales of the renewed BMW 7-Series flagship have lagged the rival Mercedes S-Class.
The future looks grim for BMW, too. A new version of the critical 5-Series is not due before 2017; a new 3-Series is not expected until 2018. The key China market is slowing, and so are others important to BMW.
What promises to make 2016 more interesting still is the emergence of energized players in the luxury space. Detroit’s entries, Cadillac and Lincoln, are pushing new models into the marketplace and both are experiencing noteworthy gains. And then we have the Japanese.
Lexus, Infiniti and Acura are pushing new models into showrooms. At the Detroit auto show this year, Lexus showed the LC 500 coupe intended to reinvigorate the brand’s image with emotional design. Acura will not only launch the new NSX in 2016, but also showed a sport sedan in Detroit – the Precision Concept with its performance focus. Infiniti says muscular performance will define its brand, pointing to the Q60 coupe getting a 400-hp twin-turbo.
BMW, then, is facing challenges on all fronts and they could not come at a worse time.
“BMW is probably at the worst point in terms of its relative product cycle in quite a while,” Dominic O’Brien of Exane BNP Paribas tells Bloomberg.
Happy 100, BMW.