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the teutonic midas touch

Volkswagen quietly put together the best 2011 of any mainstream brand in Canada and we shouldn't have been surprised. After all, VW is a German brand and the German car makers were stellar last year. Look for more of the same in 2012.

Consider: VW Canada's sales were up 15.9 per cent thanks in large part to the Jetta with 26,749 sold – making the Jetta, which despite being something less than the darling of car critics, a Top 10 car seller. The Jetta had its most successful year since 1980. Impressive.

Or consider: Audi's sales surged 17.7 per cent, racing past Acura (15,272) and Lexus (13,364) in the annual sales race and almost doubling down on Infiniti (6,936). Audi is now setting its sights on the big premium auto makers, BMW and Mercedes-Benz.

Ah, those two. BMW combined with its Mini brand to sell 34,928 vehicles in Canada, compared to the combined sales of Mercedes Benz/smart at 32,914 units, according to figures from DesRosiers Automotive Consultants. Case closed. So BMW is No. 1 in luxury sales. Not so fast.

"If I just look at individual brands," says analyst Dennis DesRosiers, "then Mercedes Benz (31,063 units) outsold BMW (29,773 units). But the Mercedes-Benz numbers includes their commercial Sprinter van, and if you exclude this vehicle and only look at sales of luxury vehicles, then BMW (29,773 units) outsold Mercedes Benz (28,584 units)."

Or look at this rivalry another way, adds DesRosiers: BMW/Mini improved sales by 10.2 per cent and Mercedes/Smart improved by only 4 per cent. By brand, Mini was up 14.5 per cent, BMW 9.5 per cent, Mercedes Benz 4.8 per cent and Smart was down by 8.3 per cent.

Hair-splitting aside, the German car company story is all about being up, up, up. Indeed, if we include Porsche (sales up 8.7 per cent) in the bigger VW Group, the combined sales of VW, Audi and Porsche came to 71,683 (VW at 52,604, Audi at 16,867 and Porsche at 2,212).

"Actually," says DesRosiers in a note to clients, "a purist would say that any review of performance of German brands should include VW/Audi who would easily come in at the top position by company (62,255 units) and by brand with VW (52,604 units). And Audi would be the clear winner if change in unit sales was the metric with a 17.7 per cent increase last year. And why not include Porsche whose sales were up 8.7 per cent?"

More remarkable, the Germans achieved all this in a Canadian market up just 1.8 per cent on the year. By any measure, this group collectively outperformed the market. The question is, why? The easy answer is that this is a global story of car companies whose products reflect an aggressive world view.

"VW is the standout in terms of exceeding expectations – in every region and every business. VW's China mass market profits have moved even higher," said Bernstein Research analyst Max Warburton in a Detroit News report, adding, "German manufacturers can still deliver robust levels of profitability" regardless of global economic conditions.

Profits are a byproduct of solid and smart investment and nowhere was this more on display than at last fall's Frankfurt Motor Show. The German car companies put on the grandest, most lavish display of new models in auto show history. Audi, for instance, spent $14.4-million (U.S.) on a pavilion longer than a football field and wider than a hockey rink – 6,977 square metres or 75,000 square feet.

Audi was big, but Mercedes was bigger at 9,500 square metres or 102,257 square feet of display space over three floors. And then there was BMW at 10,000 square metres or 107,639 square feet.

These three premium car companies are consumed with the race to be the world's largest luxury car maker. As Daimler CEO Dieter Zetsche wrote to employees last July, "Some of our competitors are now growing faster and more profitably than we are. We can't be content to be in a solid second or even third place: We are Daimler. We should be far ahead of the pack! And if that requires something that we don't currently have, then we'll identify and develop it."

As reported in Automotive News, Zetsche added in a later interview, "Our goal is to be No. 1 in profitability and sales in the premium segment."

It is the same story at BMW.

"We have the clear objective to stay the most successful premium manufacturer," BMW sales boss Ian Robertson told Automotive News Europe, echoing similar comments from Audi CEO Rupert Stadler, who also makes no bones about the goal of being No. 1.

Look for the ambitious plans of all the German auto makers to spill over into Canada in the form of more models competing in more segments and even niches at price points dipping below $30,000 for the premium brands and below $16,000 for VW, whose Jetta starts at $15,875.

Various reports point to BMW's plan for annual sales of 2.6 million by 2020 (BMW, Mini and Rolls-Royce inclusive). That would be an increase of 800,000 over current global sales. That suggests BMW Canada sales approaching some 50,000 within eight years. Stadler, meanwhile, announced last year that Audi plans to sell two million units annually by 2020, up from 1.5 million sales by 2014.

For car buyers, this means more models. Mercedes has new compact cars planned, as well as a sporty station wagon called the CLS Shooting Brake. As Automotive New reports, second-generation A- and B-class models will ride on a new platform called MFA (Mercedes Front-wheel-drive Architecture) and this is where the budget Mercedes cars will ride.

Also look for a C-Class cabriolet (in 2015) and if you believe Automotive News, a coupe version of the M-class called the MLC might be in showrooms by 2015. Without question, the S-Class flagship will be replaced within a year.

Last year, Robertson said BMW will expand its lineup dramatically in the coming years, with reports suggesting a 2-Series cabriolet and coupe to take the place of the current 1-Series convertible and coupe.

Naturally, BMW will introduce all sorts of variants of the current and all-new 3-Series. Interestingly, the next-generation coupe and convertible 3-Series will become the 4-Series line, says Automotive News Europe.

And then there is BMW's push down-market based on its coming "lower vehicle class" architecture, which in German is called the Untere Fahrzeugklasse or UKL.

"With the UKL alone, there will be six to nine new models in the coming years," Robertson said last year in Frankfurt, without going into details about this new front-wheel platform for smaller BMW and Mini brands.

Audi, of course, has its own plan to expand from the current 42 models offered globally to 50 by 2020, including R versions of various models. Automotive News reports that Audi is planning an A9 coupe for 2015 to go head-to-head with the Mercedes CL, and a Q6 slated for 2014 is coming to compete with the BMW X6. Audi's biggest advantage lies in the fact that it's part of the sprawling VW Group, allowing Audi to spread costs across multiple brands, from VW to Seat to Skoda.

The VW Group, in fact, plans to become the world's biggest auto maker by 2018 or sooner and, to get there, the expectation is for sales of one million VW and Audi vehicles combined in North America. That suggests 80,000 VW brand models sold in Canada and at least 20,000 Audis if not more.

Audi Canada president Martin Sander says the company is aiming for sales of 22,500 in 2012. He says it's possible Audi will grab the luxury sales crown by 2015, but it will take quite a lot of work and some luck, too.

As for VW, in Canada the Passat mid-size car is just now rolling into dealerships in big numbers and if the Jetta in 2011 is any indication, the 2012 Passat will be a strong seller – at least compared to its predecessor. The lineup will also be bolstered by a Beetle turbo-diesel and perhaps a Beetle convertible this year, as well as the racy Golf R and even a Jetta hybrid.

For the Germans, 2012 should be quite the year, better even than 2011 and by no small measure.

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