This year in Detroit BMW showed a slew of new, small cars like the 1- and 2-Series, and a lighter-weight M3 and M4, in its latest effort to tighten and refine its burgeoning lineup.
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Mercedes, with its new 4-cylinder AMG engine, and Audi, with the S8 and sporty A3, did the same. The idea with each seems to be that smaller vehicles with turbocharged engines offer efficiency gains with uncompromised performance, plus a healthy profit margin to boot.
Not that they have any choice in the matter. As a Bain study recently reported, the United States is expected to continue leading the global luxury market in terms of trends and profits for the next three years. So far, Americans continue to demonstrate that they care about so-called green energy—but they don’t have to sacrifice performance.
“Sustainability will become an important aspect of the new premium market,” BMW head Ludwig Willisch said this week at the Detroit Auto Show. “Brands that don’t follow suit will have a problem.”
In the context of the conversation, he seemed to be referring to his two other primary competitors and German compatriots, Mercedes and Audi. Last year was the best year ever, sales wise, for BMW, with more than than 376,000 BMW and MINI vehicles sold in the US alone; BMW was top premium sales leader across the Americas in 2013, Willisch said.
Indeed, Mercedes’ new four-cylinder GLA and GLK will give the BMW X series and Audi Q range stiff competition. Its new CLA45 AMG four-door sedan (or, as they call it, four-door coupe) will show strongly against the BMW 1-Series at entry M variants.
Critics have recently cautioned that Daimler has fallen behind the considerable momentum at Audi and BMW. Daimler profit lags by 10% or so behind its two rivals, and is outsold by BMW in China, for instance, by more than 70%. Audi, which has the luxury of relying strongly on resources provided by the colossal Volkswagen Group, sells 50% more cars in China than does Mercedes.
But at a roundtable discussion yesterday in Detroit, Daimler boss Dieter Zetsche sounded optimistic as he reiterated his goal to push Daimler to become the best-selling premium carmaker in the world by 2020. Share values there did increase the last few months of 2013, though they had remained flat earlier in his tenure.
Audi, which earned attention at recent CES show in Las Vegas when it announced plans to integrate Google’s Android operating system into its navigation systems, says it remains focused on diesel and fuel-cell technology as a way to increase sustainabilty for premium cars and SUVs.
“Audi is the brand of the future,” said Audi North America head Scott Keogh said. “But we also intend for this growth to be organic. Sustainability plays a big role here.”
Keogh said he expects steadily increasing growth in 2014 with massive gains for Audi in China as it fights to beat BMW and Mercedes for sales in the United States. America is Audi’s third-largest market behind China and Europe, though it saw a record 150,000 units sold here in 2013.
Back at BMW, Willisch says his competitors—neither of which showed a supercar in Detroit—will be unable to content with the technology and élan present in the forthcoming i8 supercar, a futuristic, exotic-looking machine that will go 82 miles on a single charge before switching to hybrid power. The car is built entirely of carbon fiber manufactured with wind power, with a eucalyptus dash and nontoxic olive-oil-infused leather seats.
“This is our sustainability story,” Willisch said, indicating the car. “This is incredibly efficient. Better yet, it’s huge fun to drive.”