NEW YORK, July 3 — Like an arrogant sports dynasty, Germany’s luxury car brands have long dominated the competition — and when rivals get too close, the champs load up and zoom ahead again.
So it is in the 2015 season. Mercedes-Benz, BMW and Audi are winning by important measures: critically acclaimed models, technical innovation and sales in the United States and around the world. And their ambitions are only growing, as they target broader segments of the market with affordable small cars and the crossover sport utility vehicles that Americans seemingly can’t get enough of.
Most US and Japanese brands, including Cadillac, Lincoln, Infiniti and Acura, find themselves again scrambling to catch up.
With cars flying out of showrooms at prerecession levels, luxury sales continue to outpace the recovery, up 8.6 per cent this year through May versus 4.5 per cent for the total market. That has luxury brands fighting for a bigger slice of a larger pie, and the Germans must be feeling stuffed: BMW sold a US-record 168,623 cars through the first half of 2015, up 7.1 per cent, to seize the luxury lead. The Mercedes brand set its own record with 164,504 sales, up 8.8 per cent, according to Motor Intelligence.
Audi, which is owned by Volkswagen, remains neck-and-neck with BMW and Mercedes for the global luxury crown, but it had long been an also-ran in the United States. Now, Audi’s high-design cars have made it a genuine alternative, and a darling of younger professionals. Audi’s ascent includes 54 consecutive month-over-month sales records in the US, vaulting it to fourth place in luxury with nearly 94,000 units through June.
Only Toyota’s Lexus division, which tumbled down the US charts after leading as recently as 2011, is making a serious run at BMW and Mercedes - and only after Toyota’s president, Akio Toyoda, urged a revamp of Lexus’ bulletproof-but-boring cars to compete against the dynamic Germans. Lexus sold nearly 159,000 cars through June, helped by its new IS sedan and NX crossover.
How have the German automakers done it? For one, by cranking out a dizzying array of models across a broader price spectrum than its competitors: from US$30,000 entry-level cars and newfangled crossovers to six-figure supercars and electrified models.
Count every body style and engine, and BMW offers 100 models in the US They include so many crossover sport utility vehicles — many churned out from BMW’s plant in Spartanburg, South Carolina — that BMW might run out of numbers: The X1, X3, X4, X5, X6 and, coming around 2017, a three-row X7.
“First of all, Americans love power and fun performance, and we can deliver that,” said Ludwig Willisch, chief executive and president of BMW of North America.
Michael Harley, editor-in-chief of the car-shopping site AutoWeb, said that the Germans have engineered a remarkable turnabout from the upstart days of Japanese rivals.
“In the '90s, Lexus, Infiniti and Acura were leading the tech race, and the Germans were caught napping,” Harley said. “Now the Japanese have lost direction a bit, their technology seems old school, and the future of the industry is being determined by the Germans, not the Japanese.”
Harley said that Mercedes, BMW and Audi had combined a product onslaught, aggressive pricing and improved reliability with traditional strengths in design, performance, engineering and technology, “and it’s all paying off in the showroom.”
Michael Maldin and his wife, Elaine, paid US$48,000 for a 2015 Mercedes C 300 sedan in January, a brand that the longtime BMW owners had considered ostentatious and insufficiently sporty. But Michael Maldin was won over by the compact C-Class’ interior.
“It looks like something out of MoMA, very posh and contemporary,” said Maldin, a sales manager for an enterprise software company in Boulder, Colorado.
As their expanding lineups battle it out, including in the critical California market — where BMW sells one of every four 3 Series sold in the United States — German brands are also dipping toward the mainstream.
With Americans paying an average US$33,500 for a new car, models including the Audi A3 sedan, BMW 2 Series coupe and Mercedes’ CLA sedan are solidly average, at least in price. Mercedes trumpeted the original US$29,995 price of the CLA 250 on billboards and commercials.
For seven of 10 customers, the CLA is their first Mercedes, said Steve Cannon, chief executive of Mercedes-Benz USA. Three-quarters of buyers are coming from Toyota, Ford and other mass-market brands, and many are younger than traditional Mercedes buyers.
“If you’re not feeding the brand from the bottom over time, if you don’t have that healthy inflow of younger buyers, you’ll become irrelevant at some point,” Cannon said.
The Germans are exploiting another edge as well: Wealthy buyers happily spend US$100,000 and more for a Mercedes especially, but also for some BMWs and Audis — higher altitudes where Asian and US brands have struggled to compete.
Mercedes sold more than 25,000 S-Classes last year, a dominating showing for a car that costs from US$95,000 to well over US$200,000.
“As you introduce volume at the lower end, profit margins do get challenged, but we can counterpunch with the S-Class or AMG GT,” a sports car, Cannon said. “If other brands counterpunch, they move into our strong suit, and they have difficulty.” — The New York Times
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