Sales war between German premium trio could turn them into victims image

The BMW-Audi-Mercedes triumvirate has long been dominating the sales of the premium segment – even as mass automakers were fighting the worst slump in two decades across the European region.

Driven by exports and a huge model expansion strategy, all three German premium makers have been enjoying record deliveries and profits. But, as industry observers and analysts point out, there are also problems.

“The German premiums have sacrificed some of their exclusivity by entering smaller, volume segments like compacts,” said Bernd Hoennighausen, an automotive consultant. “They’ve pushed volume with fleet discounts of around 20 percent,” he adds. “This may open the door to newer players like Jaguar, who are starting to offer fleet-relevant products.”

Audi and Mercedes-Benz both target BMW’s first place – the Bavarian automaker has been the leader since the first half of the 2000s. The sales war has triggered incentive driven skirmishes, besides fully entering the lower-priced compact segment. That threatens to lower earnings and also muddy the overall brand image of luxurious products.

For now, the three are comfortably ahead, according to data coming from consulting firm IHS Automotive. Total sales of the three brands reached 4.7 million cars in 2013, representing almost 60% of the premium segment. And that’s up 38% since 2007, on the brink of the latest world economy crisis.

Via Reuters