If you like a good fight, pull up your chair and join us ringside at the captivating, hard-fought struggle for No. 1 between the three heavyweights from Germany: BMW, Audi and Mercedes-Benz.
As cage matches automotive-style go, nothing is better than this. These wickedly competitive and immensely profitable brands all want to wear the crown owned by BMW for nearly a decade.
BMW dethroned Mercedes-Benz as the world leader in sales among premium-car makers in 2005, the first year BMW outsold Mercedes on an annual basis since 1993. That one stung. Then Audi AG overtook Mercedes-Benz in 2011 as the world's No. 2 premium-car brand by sales – largely on the strength of record sales amid booming demand in China. A more serious blow, one painful and embarrassing for a company whose officials remind us regularly that company founder Gottlieb Daimler invented the automobile.
Since Dieter Zetsche took over as Daimler AG's chairman in 2006, Mercedes has been chasing BMW. More than one German analyst has said that being No. 1 is what Mercedes lives for.
Indeed, as far back as 2011, Zetsche was imploring employees to take this brawl seriously.
"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," Zetsche said in a letter to Daimler employees in July, 2011.
That same year, Zetsche told Automotive News Europe, "Our goal is to be No. 1 in profitability and sales in the premium segment." Since then, the leadership at Audi and BMW has said virtually the same thing: No. 1 matters.
But this matter has worn thin at Mercedes. As Zetsche said, No. 3 is not possible in the long term and No. 2 is not good enough. Mercedes-Benz might take until 2020 to get atop the mountain again, but it might come sooner and there is a strategy in place.
It's interesting to note how often the leaders at all three deny any obsession with delivering the knockout blow to the other two, while at the same time reciting the minutia of sales numbers region by region, country by country.
As Ola Kallenius, the global head of sales and marketing for Mercedes-Benz Cars says, the Mercedes brand is in a leadership position in 192 of the 193 countries where Mercedes are sold. In fact, the Mercedes brand is tracking at No. 1 in Canada this year among premium brands, too, after ending 2013 as No. 1. The global problem is China, where both Audi and BMW have a longer history and a bigger footprint than Mercedes.
"The most important thing is that we're focusing much, much more on the customer and our own strategy than we are on that particular thing [the race for No. 1]," says Kallenius.
The numbers, though, are there for all to see. BMW juiced sales by 7.5 per cent in 2013, to a record 1.66 million cars. The 3-Series remains red-hot around the world and the X1 compact sport-utility vehicle is a global smash.
Not far behind is Audi, the Volkswagen Group's wonderful profit-spinner. Audi trailed BMW by 79,600 cars. Mercedes, at No. 3, was behind BMW globally by 193,500. Both Audi and Mercedes narrowed the gap with BMW in 2013, and plan to makes things even tighter by the end of this year.
Kallenius concedes the importance of being No. 1, though he deflects any suggestion that being No. 1 is an obsession. He says, "It can only be our ambition to go for the No. 1 spot. That has to be your ambition for the brand, there's no question about it.
"But we don't go at it from the other way around. We focus on our customers and the customer experience, the product experience, the experience at the dealership or wherever we meet the customer. That is most important for the long term. We feel that that will lead to the No. 1 position."
New models such as the CLA sedan, which is now being offered in a base model with 4MATIC four-wheel drive, and the upcoming GLA small sport utility and C-Class will drive sales in Canada and around the world – that and halo models such as the S-Class coupe set to go on sale later this year.
"We're in the middle of what we'll call a brand, a product and a customer experience offensive," says Kallenius. "If we get these three things right, which is what we're working on 24/7, the sales will come as a result of that. So you don't start with an Excel spreadsheet; you start working with the fundamentals."
And then he plays the China card, after noting that Mercedes is enjoying double-digit growth around the world.
"If you look at it relative to two other premium manufacturers [BMW and Audi], it's really a tale of two races," he says. "It's a race in China and it's a race everywhere else in the world except for China.
"In many of the markets around the world, Germany, Japan, U.S., Australia, Russia – absolute key markets – we're No. 1. And year-to-date we're No. 1 here, so we can add Canada to that list in 2014. But in China, there's a very big gap, particularly with respect to Audi because our starting positions were different."
Canada? Mercedes was No. 1 last year, with sales up 5 per cent to 34,781, according to DesRosiers Automotive Consultants. BMW was No. 2 with sales of 31,710 (up 1 per cent), while Canadians bought 20,506 Audis, an increase of 2.5 per cent. With volume models such as the C-Class and GLA, Mercedes is almost a lock to finish 2014 in the No. 1 spot.
"No. 1, that's where we want to be, but it's not what we're looking at every day – we're not saying, 'Okay, let's beat these guys on sales,'" says Tim Reuss, Mercedes-Benz Canada president and chief executive officer. "Let's do all the basics right, and the numbers will follow."
Central to the basics are new products. Audi will surely see a rise in sales in Canada once the A3 sedan arrives in big numbers at dealer showrooms. Also planned from Audi is the Q3 small SUV, a plug-in hybrid version of the A3 hatchback and a freshened A8 sedan.
BMW is busy launching the 2-Series coupe and convertible, the 4-Series convertible, the M3 redesign, the i-brand battery cars, the 4-Series Gran Coupe and the X4 SUV. BMW is taking this competition seriously. As Shakespeare's King Henry IV said, "Uneasy lies the head that wears a crown."
Annual Canadian Sales of the German Big Three Premium Brands
Source: DesRosiers Automotive Consultants
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