German Premium Carmakers Report Record Global Sales in 2006

As expected, the BMW Group retained its title as the world's leading premium car manufacturer for the second consecutive year, after setting a new sales record in 2006. The Mercedes Car Group ended the year not far behind as global sales picked up in line with key model launches. However, the most impressive performance was attributed to Audi, which completed its 11th consecutive record year in 2006 and marches surely toward the 1 million units mark in 2007.

Fifth Consecutive Sales Record for BMW Group

Having increased global deliveries for the fifth year in a row, the BMW Group is looking forward to 2007 with confidence. The Munich carmaker aims to break the 1.4 million unit milestone in 2007 and continue to be number one in the premium segment. In 2006, the BMW Group, comprising the BMW, Mini and Rolls-Royce brands, delivered a total 1,373,926 units worldwide, which represents a 3.5 year-on-year (y/y) rise on 2005. Most of the gains came from the core BMW brand whose global sales jumped 5.2% up to 1.19 million thanks essentially to robust sales of its key 3-Series line. Because of the production changeover and building measures to expand production capacity, the availability of the Mini line over the course of the year has been limited. For this reason, global sales of the Mini brand fell by 6.2% to 188,072 units. The Rolls-Royce brand sold 805 Phantoms to customers in 2006, which marks a 1.1% y/y increase and means that, since the luxury limousine carmaker joined the BMW family in 2003, sales have risen for the fourth time in a row. 

Brisk SUV Sales Boost Mercedes Car Group 2006 Global Deliveries

Global sales of the Mercedes Car Group (MCG), which includes the Mercedes, Smart and Maybach brands, have accelerated in the closing months of 2006 but this proved insufficient to close the gap on rival BMW Group. With a total 1,260,600 units delivered to customers in 2006, the Mercedes Car Group was still around 113,000 units behind the BMW Group. Despite this, 2006 was still the best ever sales year for the core Mercedes-Benz brand, whose sales advanced 6.5% y/y to reach a record 1,148,500 units (including Maybach sales). Robust demand for Mercedes sports-utility vehicle (SUV) line and the impressive success of the brand in the luxury segment was cemented by the full availability of the S-Class, the model changeover for the CL-Class, and the new generation SL largely compensated weaker sales of the high volume C and A Class. In a statement, parent company DaimlerChrysler (DCX) said "Mercedes-Benz posted strong growth in the SUV segment: Worldwide deliveries of M-, R-, GL- and G-Class models grew by 86% in 2006 to 169,500 units. Mercedes-Benz is also the best-selling premium brand in the SUV segment in Germany and Western Europe."

Like the BMW Group, the Mercedes Car Group did not benefit from extra volumes from its small car division, Smart, which is at the dawn of a new area with the impending launch of the second generation ForTwo model. In 2006, Smart sales reached 112,100 units, down 21.6% on last year but in view of the upcoming model changeover for the Smart ForTwo and the phasing out of the Smart ForFour, the company explained that the result was in line with the sales target.

Audi Completes 11thConsecutive Sales Record

Audi, the premium car division of the Volkswagen (VW) Group, has succeeded in setting a new record for global vehicle sales for the 11th year in a row. With a total of 905,100 vehicles delivered worldwide, Audi sales accelerated 9.2% in 2006, which is a much higher rate than rival BMW and Mercedes. In the light of these results, Rupert Stadler, chairman of the board of management said "Audi is the fastest-growing premium brand. This puts us well on our way to becoming the most successful premium manufacturer in the world by 2015", by which time the Audi brand aims to achieve global sales of 1.4 million units. 

Outlook and Implications

German premium carmakers have benefited from a particularly favourable market context over the past three years and have maximised their growth potential by launching niche models to satisfy a fragmenting customer demand. In this sense Audi and Mercedes have the most active approach to luring a wider range of customers. Audi is relentlessly working on expanding its model line and global reach. As part of its plans to reach one million car deliveries in 2008 and 1.4 million by 2015, Audi is already preparing to launch a number of new models and model variants, including a new generation A4 (2007), the A7 four-door coupé (2009), A5 coupé (2007) and A5 cabriolet (2009), the compact A1 (2009) and the Q5 compact SUV from 2008.

For its part the Mercedes Car Group will welcome the arrival of a new generation C-Class in 2007 and will start benefiting from better volumes from its Smart brand with the launch of the second generation ForTwo in April 2007. The premium carmaker is also working on the new MLK, a compact SUV positioned against the BMW X3 and is considering introducing a range of compact vehicles in North America while possibly bringing a smaller Maybach from 2009. At BMW, a real model offensive will kick in between 2008 and 2010 when the carmaker brings two entirely new models to market while presenting a cabrio version of the 1-series and the next generation 5-Series.  

Mercedes is hopeful that it will report record sales figures again in 2007 but did not provide a specific sales target. In contrast the BMW Group reaffirmed its intention to lift global sales beyond the 1.4 million units threshold in 2007. However, competition is expected to intensify in the premium market. Not only because of the emergence of Audi as another serious player with ambitious growth ambitions, but also since other premium brands such as Lexus are looking to expand their reach globally, while more traditional premium carmakers like Saab and Volvo are also making progress. In the event that overall demand for premium cars decelerates, carmakers operating in this market will be forced to compete more aggressively in order to maintain sales.