Audi's Stronghold in China Threatened by BMW, Mercedes-Benz

For the last 20 years, Audi has been top dog in the Chinese luxury auto market. Now its reign could be threatened as BMW and Mercedes-Benz begin to gain traction in the emerging market. 

"Mercedes and BMW have more up side than Audi in emerging markets, so it will be difficult for Audi to achieve its target," London-based automotive analyst Arndt Ellinghorst told Automotive News.

As the world's single largest automotive market, Chinese customers are increasingly important to BMW and Mercedes. As a result, both have crafted vehicles specifically aimed at the Chinese market. Tomorrow at the Beijing auto show, BMW will unveil an extended 5 Series, while Mercedes is set to debut its new longer E Class. The reasoning for extended wheelbases is that the wealthier Chinese population is typically chauffeured. 

Earlier this month, Audi posted its first quarter sales figures. With a strong start to 2010, Audi was able to secure the second place spot in global luxury sales, bumping Mercedes down to third. The Ingolstadt based automaker hasn't fared so well in China lately. Over that last 6 years, Audi's market share has slipped from 66 percent down to 46 percent. BMW has climbed from 16 to 23 percent, while Mercedes more than doubled its share, from 7 to 16 percent.

Audi had 159,000 deliveries in 2009, but has a goal to sell 200,000 this year. On track for that target, it sold 51,449 in the first quarter this year. Last year BMW sold 90,500 vehicles, but is on track to surpass that mark, with 34,179 sold through March. Mercedes sold 24,100 vehicles in the first quarter of 2010, and should meet its 100,000 sales goal. BMW is investing $749 million in a new Chinese factory to double capacity to 100,000 units annually. Mercedes already has a 100,000 unit production capacity in China.  

"The potential of the Chinese market remains enormous, and our targets are correspondingly ambitious," Daimler CEO Dieter Zetsche said last week.

Source: Automotive News (Subscription required)

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Mercedes-Benz to Build Subcompact B-Class AMG, Destined for U.S. Market?

Mercedes-Benz to Build Subcompact B-Class AMG, Destined for U.S. Market?
What’s next for Mercedes-Benz’s AMG performance division? According to executives, a hopped-up AMG variant of the next-generation B-class subcompact.

Current AMG boss Volker Mornhinweg (who’s destined for Mercedes-Benz’s van division in a month) recently told Automotive News that the tuning wing is, in fact, developing a high-performance variant of the next-gen B-class. The car will be AMG’s first stab at something smaller than a C-class, but Mornhinwheg says it’s a move to attract younger customers.

A B-class AMG would also be an ideal offering for Mercedes-Benz to counter the likes of the Mini Cooper S, Audi’s S3, and the Volkswagen GTI. Changes will include revised chassis tuning, cosmetic enhancements, and a high-performance engine -- likely a boosted four-cylinder -- that will be hand-built in AMG’s factory in Affalterbach, Germany.

Though the model is slated to launch in Europe at the end of 2011, it’s still uncertain if the B-class AMG -- let alone the entire B-class range -- is destined for the U.S. Mercedes-Benz has long entertained the idea of launching the B-class in America, but executives recently noted the business case rests upon fuel costs and Americans’ demand for small cars.

If the B-class is green lighted for the U.S., we think the AMG variant is almost certainly headed here.  The U.S. remains one of AMG’s largest markets, and a low-cost, fuel-sipping sport compact may help the brand expand into thriving new segments.

Source: Automotive News (Subscription Required)

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Mercedes-Benz Considering Making S-class Hybrid-only?

Mercedes-Benz Considering Making S-class Hybrid-only?

With mostly large V-8s and twin-turbo V-12s in its lineup, the Mercedes-Benz S-class isn’t particularly fuel-efficient. In light of upcoming fuel economy standards, Daimler executives reportedly are considering making the S-class a hybrid-only lineup.

According to Automotive News, inside dealer sources said Daimler executives are considering the switch to all gasoline-electric models for the next-generation S-class. If the switch is made, the dealer sources say that no S-class will be offered with only an internal combustion engine -- including the high-performance AMG versions. The fact that even the Autobahn-storming AMG models would become hybrids has drawn criticism from U.S. dealerships because they worry hybrids are not perceived as true performance cars in this market.

As of right now, only a few U.S. Mercedes dealerships have been briefed on the proposed plan. Those dealers will meet with Joachim Schmidt, head of sales and marketing at Mercedes-Benz Cars, this week at The Masters golf tournament in August, Georgia. Mercedes is a tournament sponsor.

Currently, the most fuel-efficient S-class is the recently introduced S400 Hybrid with a fuel economy rating of 19/26 mpg (city/highway). From there, the ratings continue to decline all the way down to 11/17 mpg for the top-of-the-line S65 AMG. According to Tommy Baker, chairman of the Mercedes-Benz dealership board in the U.S. and owner of a Mercedes dealership in Charleston, South Carolina, this doesn’t matter to S-class buyers. He says that for S-class buyers, the “goal is not gas mileage.”

“The most important thing in the American market -- regardless of hybrid, lithium, or electric cars -- is that we Americans are different than any market and we are going to want those gasoline engines,” Baker told Automotive News. To that end, Mercedes-Benz has already announced a new, more fuel-efficient 5.5-liter twin-turbo V-8 to replace the company’s 6.2-liter V-8 in its “63” AMG models.

Although Baker says the all-hybrid S-class lineup may not fly with U.S. consumers, an average combined rating of 16 mpg and emissions of a similar level won’t fly with the government’s upcoming fuel economy and emissions standards. Two Daimler sources told Automotive News that the move is being considered to help Mercedes reach the strict European CO2 emissions laws and the U.S. fuel economy standard by mid-decade. A final decision on the matter is expected within three months and, if approved, would be implemented on the next-generation S-class due out in Europe in 2013 and a year later in the U.S.

Source: Automotive News (Subscription Required)

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BMW, Mercedes-Benz Fight to Outsell Each Other in China

BMW, Mercedes-Benz Fight to Outsell Each Other in China
BMW may have outsold Mercedes-Benz globally in 2009, but the two German automakers are both vying to be the biggest luxury brands in the Chinese market.


For the time being, BMW holds that title. Over the past six years, its marketshare in China has grown from 16 to 23 percent, but BMW isn’t resting on its laurels. At the Beijing auto show, CEO Norbert Reithofer announced the company has increased its 2010 sales forecast (which includes BMW, Mini, and Rolls-Royce vehicles) by 20 percent, bumping the total to 120,000 units. In contrast, BMW sold 90,500 vehicles in China in 2009.

New vehicles tailored to the Chinese market -- like the new long wheelbase 5 Series sedan -- will likely help BMW achieve that goal, but the automaker sees the potential to grow over the long term. Reithofer believes his company can build as many as 300,000 vehicles annually in China, thanks in part to an expanded joint venture with Brilliance Automotive Holdings. BMW is expanding its existing plant in Shengyang, which builds the 3- and 5 Series lines, but is also building a second facility, which may build the X1 crossover for the market.

Daimler was a little less forthcoming with specific goals for its Chinese market strategy, but said it simply plans on outselling BMW by 2011. The automaker believes a number of products, designed exclusively for Chinese customers, will help propel it to the top of the sales charts. In addition to launching a new line of heavy-duty trucks for commercial clients, Mercedes-Benz will ultimately launch an electric car co-developed with Chinese automaker BYD, and a long-wheelbase C-class sedan.

Of course, these plans for domination assume another German rival -- Audi -- isn’t able to turn about its fortunes in China. Although it had been the leading luxury brand in the market for the last 20 years, Audi has seen its marketshare slip over the last six years, falling from 66 to 46 percent. Should the firm’s new A8L or the forthcoming A7 fastback resonate with Chinese buyers, BMW and Mercedes-Benz both have their work cut out for them.

Source: Automotive News; 1,2 (Subscription required)

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