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Mercedes Benz SLS AMG E-Cell (Paul Sancya/AP Photo)
Mercedes Benz SLS AMG E-Cell (Paul Sancya/AP Photo)

Luxury Car Showdown

Mercedes-Benz takes crown from BMW Add to ...

Mercedes-Benz is now the No. 1 premium brand in Canada.

The eight-year reign of BMW ended Dec. 31 and it ended with something of a bang for Mercedes-Benz Canada. Mercedes sales were up nearly 70 per cent in December to 3,080. According to DesRosiers Automotive Consultants, Mercedes-Benz sales jumped 22.1 per cent to 29,632 in 2010, versus 27,202 for BMW (sales up 10 per cent on the year).

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"I have to be honest," says Mercedes-Benz Canada president and CEO Marcus Breitschwerdt, who first arrived at the helm here in Canada in 2003. "It would be a bloody lie if I didn't say I feel good - a big smile."

Mercedes and BMW had been duelling all of last year for the sales crown among premium makers. Even late last year, former BMW Canada president Franz Jung refused to throw in the towel, despite trailing Mercedes all year and barely holding on to the sales crown in 2008. Jung has since moved along to run BMW's business in Italy and has been replaced by former BMW Canada marketing boss Manfred Braul.

"I've been here through four BMW (Canada) presidents," chuckles Breitschwerdt, somewhat tongue in cheek. Breitschwerdt is only the fifth Mercedes Canada president in the 55-year history of the company.

As a reward for being No. 1., Mercedes-Benz employees this year will get an extra day off and the company held a small champagne celebration at headquarters in downtown Toronto. But in the car business, it's never what you did; no, it's always what are you going to do next.

"It will certainly be a good year for the premium segment and when it's all done we'll be No. 1 this year," says Breitschwerdt.

Perhaps. But it's one thing to win a title; it's quite another to defend it for one year, much less the eight BMW Canada managed. Last year, BMW Canada had an aging lineup and the company's most popular model, the 3-Series, will get a complete remake this year. That alone will boost BMW Canada sales.

To counter, Mercedes will bring a face-lifted C-Class to market this summer. A full replacement for the current third-generation Mercedes-Benz C-Class - the best-selling Mercedes in Canada with 8,090 sold in 2010 - isn't due until 2013. Mercedes expects the C to remain competitive with some 2,000 individual updates - including a 3.5-litre V-6 engine with a claimed 31 per cent improvement in fuel economy. Styling and equipment changes are in the package, too.

Of course, the premium segment isn't simply a two-horse race between Mercedes and BMW. Audi was also a big winner in 2010.

"With the luxury brands, the big story is a toss-up," analyst Dennis DesRosiers said in a note to clients. "Audi had the largest gain in sales with sales up 26.7 per cent, though Mercedes-Benz overtook BMW to become the No. 1 selling luxury marque in Canada for the first time since I believe the year 2000."

Interestingly, DesRosiers also noted that dealers report Mercedes achieved the sales record "and remained very profitable, which is quite an achievement. Of course, everyone discounts but most of the sales in the luxury segments were driven by great product rather than heavy-duty discounting."

Breitschwerdt insists Mercedes Canada made lots of money last year. Critics have suggested the company bought sales in Canada by subsidizing leases and offering rich cash discounts. Not so, says Breitschwerdt.

"We sold more cars and were profitable because we offer a good product at a fair price," he says.

Aside from the C-Class, the great success story for Mercedes in Canada was the GLK crossover utility with nearly 6,000 sold in 2010. In all, the company sold 9,609 crossovers and SUVs last year.

Meanwhile, Mercedes moved 8,219 pre-owned vehicles in 2010, versus about 2,000 in 2003. That matters because 45 per cent of Mercedes sales in this country were actually moved on a lease. By keeping lease returns in the corporate fold, Mercedes is in a better position to control residual values, which in turn support affordable lease payments.

Breitschwerdt says every owner, rich or poor, cares about payments and value and like matters. However, with Mercedes targeting conquest sales among current Honda, Toyota, Nissan, Acura, Infiniti and other Japanese import owners, value and affordability are critical.

"They [Japanese import owners]see now they can buy something a little better, a little more expressive, a bit more innovative, for just a little more," he says, discussing part of the company's growth strategy.

Breitschwerdt, in fact, predicts further growth in the premium slice of the Canadian market. Currently, luxury sales account for about 5 per cent of all new car sales in Canada. Growth to something approaching 10 per cent of the market, perhaps higher, is possible, he argues.

Canada is more like a developed European country than the United States, he says. The secret is for Mercedes to fill out its lineup with a range of products that appeal to the broad swatch of middle class and upper middle class car buyers here.

"For growth, we need the right product, the right pricing and affordability," says.

Which is why Mercedes-Benz is set to launch a wave of small luxury vehicles in both Canada and the U.S. An all-new C-class coupe is coming, along with at least two if not three derivatives of the front-wheel-drive B-Class wagon in 2012 and 2013.

BMW, by the way, is also planning a new array of small cars for North America and Audi has a new A3 coming, too. The race for the luxury sales crown in 2011 is on.

LUXURY BRAND SALES IN CANADA

Brand

2010

2009

Per Cent Change

Market Share (Per Cent)

Mercedes-Benz

29,632

24,276

22.1

1.9

BMW

27,202

24,724

10.0

1.7

Acura

17,340

17,088

1.5

1.1

Audi

14,333

11,310

26.7

0.9

Lexus

14,249

15,802

-9.8

0.9

Infiniti

8,233

7,081

16.3

0.5

Land Rover

2,547

2,006

27.0

0.2

Porsche

2,036

1,689

20.5

0.1

Jaguar

755

804

-6.1

0.0

Source: DesRosiers Automotive Consultants

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