There are certain brands in this world that have created their powers on the skills of their people; Germany is known for its amazing car brands with their engineer’s attention to detail and a great understanding of the customers’ needs. BMW, Audi, and Mercedes-Benz are the champions of this industry, of this country, and of this market. The only problem that the German car brands where working against each other and not with each other.
They were trying to outperform their country’s brands by providing better options, better models, and better technologies – which was okay until they thought about introducing better prices. The price war raged the German brands and the battle started among Audi, BMW and Mercedes-Benz that went beyond unit sales and global expansion.
In their sales race, second-placed Audi and the third ranked Mercedes-Benz have both vowed to depose BMW, giving rise to heavy discounting, which sullies luxury brands and creates opportunities for the growing competition. The German premiums have sacrificed some of their exclusivity by entering smaller, volume segments like compacts. They’ve pushed volume with fleet discounts of around 20 percent.
This may open the door to newer players like Jaguar, who are starting to offer fleet-relevant products. For now, the Germans remain firmly on top. Their combined sales amounted to 4.7 million vehicles 2013, almost 60 percent of the global luxury car market. That represents a 38 percent gain since 2007, the eve of the financial crisis, when the big three claimed just over half of the market.Global car sales grew 21 percent overall, while European demand shrank by a quarter over the period.
With leadership successions due within two years at all three German luxury car makers, any deeper tactical change may have to wait, it may be easier for those in charge today to continue to ride the volume train, leaving the more difficult and political task of improving pricing to new management teams.