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Audi and Mercedes narrow luxury-car sales gap with BMW

Audi’s A3 compact and Mercedes-Benz’s S-class flagship helped the two German automakers narrow their sales gaps with global luxury-car leader BMW in the first half.

Six-month auto sales by BMW’s namesake brand exceeded Audi’s deliveries by 16,997 vehicles compared with a difference of 23,760 a year earlier, according to figures released by the manufacturers this week. BMW’s lead against Mercedes shrank 6 percent to 102,827 cars.

All three automakers posted record deliveries for the period. BMW sold 886,347, a rise of 10 percent to retain the sales lead, with deliveries lifted by a 36 percent jump in demand for the X5 SUV and 18 percent for the coupe-like X6 SUV. June sales rose 7 percent to 164,214.

Audi followed with 869,350 sales, a rise of 11 percent. Sales of the A3 model range surged 49 percent in the first half, while Q3 SUV deliveries jumped 37 percent and Q7 SUV demand rose 21 percent, helping the brand’s sales gap with BMW narrow by 28 percent. Last month, deliveries rose 11 percent to 155,450.

Registrations of third-placed Mercedes rose 13 percent to 783,520 through June. Growth was held back by a drop in sales of the best-selling C class as customers in China and the U.S. await the arrival of a new version in September following the model’s European introduction in March. Sales in June rose 8 percent to 142,136.

Audi has been renewing its A3 lineup since early 2013, and Mercedes has been offering a wider compact range in addition to the new S-class model brought out a year ago. Both are pushing to overtake BMW in premium-auto sales by the end of the decade.

BMW has responded with the 2-series and 4-series coupes and X4 SUV and is rolling out the plug-in i8 supercar.

“During the second half, Mercedes should have the best momentum, judging by where they are in their models’ cycles,” Daniel Schwarz, an analyst at Commerzbank in Frankfurt, said. “Wherever Mercedes is offering new models, we see more discounting among their competitors.”

Audi plans to introduce 17 new or revamped vehicles in 2014, including a remake of the iconic TT sports car, to expand its lineup by 22 percent to 60 models by 2020. It’s targeting at least 2 million annual deliveries by then. Mercedes is working to roll out 30 models by the end of the decade, including a dozen all-new vehicles.

“Once Mercedes’s C class launches everywhere, it will be pitted against BMW’s 3 series, which is a key model for the company,” Schwarz said. “That’s why I think BMW pricing for the second half of the year will probably be weaker than during the first half.”

S-class deliveries more than doubled in the six-month period, Daimler said. The compact range, which includes the A-class and B-class hatchbacks as well as the CLA four-door coupe and GLA SUV, won 24 percent more buyers.

Demand for premium models in China and the United States, the world’s two largest auto markets, is propelling growth at the three German carmakers, which are all targeting record deliveries for 2014 as they vie for the global lead. The competition is driving average price discounts of about 20 percent which, as well as sapping earnings, are at odds with the image of a luxury brand, Arndt Ellinghorst, an analyst at ISI Group in London, said in a report last month. “Pricing can improve if management boards stop chasing volume,” Ellinghorst said. “This could drive margins materially higher.”

Last year, BMW brand sold 1.66 million vehicles, ahead of Audi with 1.58 million and the Mercedes brand with 1.46 million.