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BMW clings to number one

Sales race: BMW is top dog in Australia's premium auto sector, but only by a whisker.

Audi joins Mercedes in bashing BMW as Bavarian brand’s 3 Series enters runout

17 Jun 2011

BMW might have relinquished its crown to Mercedes-Benz for the first time in seven years last year, but so far in 2011 Audi has been the luxury brand to beat in Australia.

With the Munich maker back on top after last month, albeit by fewer than 50 sales from its new German nemesis from Ingolstadt, BMW finds itself in a pincer movement as its arch-rival from Stuttgart applies pressure from behind.

Making matters worse, with the next-generation ‘F30’ 3 Series sedan expected to debut the Frankfurt motor show in September before entering production in November and going on sale in Europe next March, there is no replacement in sight for its six-year-old volume-seller for at least a year.

For now, BMW’s response to Mercedes’ facelifted C-class includes generous price cuts and equipment additions for the 3 Series sedan line-up, which were announced in February but only publicised now, effectively putting the E90 range in runout.

Aided by last year’s new 5 Series, this year’s new X3 and 6 Series Convertible and the new 1 Series hatch due here in late September, the repositioned 3 Series range will be a key plank in BMW’s defence against audacious Audi as it attempts to beat Benz.

“It is important for us to be number one,” said BMW Group Australia managing director Phil Horton at a 3 Series media event in Melbourne this week.

“We judge ourselves by the performance of our competitors. We are actually number one at the moment – by a whole 50 units year-to-date – but we are number one.”

Of the German luxury car brands, only Audi’s sales are up this year – by 12.7 per cent to May at 6629 units. BMW is down 6.4 per cent to 6677 units and Mercedes-Benz is down 8.2 per cent to 6351 (not counting commercial vehicles) in an overall market that continues to be down 5.3 per cent in 2011.

As such, Audi’s market share has increased from 1.4 per cent at the end of May 2010 to a BMW-matching 1.7 per cent this year.

Unlike some of his predecessors, Mr Horton, who replaced Stavros Yallouridis in February after he resigned suddenly last November, acknowledges Audi as a formidable foe.

Former BMW Group Australia managing director Guenther Seemann, who is BMW’s regional director for Asia Pacific and South Africa, told GoAuto in 2007 that he did not view Audi as a competitor because it did not build rear-wheel drive cars.

Mr Horton disagrees: “That was his view. I consider them a competitor, very much so.

“Australia is one of the markets in the world where the three premium German brands are most closely matched so it is certainly important to our parent company that we are number one in every market in the world and that we remain number one world-wide,” he said.

Of course, while Audi’s total includes 706 homes for the new A1, BMW’s sales tally is separate to that of direct rivals within its Mini brand (790 YTD – down 22.4 per cent), just as Smart’s (51.5 per cent lower) YTD sales total of just 96 vehicles is in addition to its Mercedes-Benz sister company’s.

Audi’s compact Q3 crossover, due for Australian release next year, promises to further boost sales for the four-ringed brand, while BMW will fight back with its all-new 6 Series sedan and a new 1 Series range that is expected to expand beyond the current hatch, coupe and convertible models.

Apart from an all-new front-drive ‘0 Series’ compact to directly compete against the A1, two additional models - the i3 city-EV and i8 plug-in hybrid super-coupe – will be launched under the all-new BMW-i brand in 2013.

Mr Horton confirmed BMW is also considering expanding the lower end of its line-up with 2 and 4 Series models – possibly with the next two-door 1 Series derivatives to wear 2 Series badges and the next 3 Series two-doors to form the 4 Series range.

“The company is actively considering a nomenclature change,” he said. “There is active consideration of using the even numbers which we currently don’t use, so that would be two and four.”

BMW Group Australia head of corporate communications Piers Scott added: “The chairman of the company has stated the goal of two million cars by the year 2020 on the basis of the greatest volume growth being in the compact and sub-compact segment of the market.

“Obviously there are not a lot of numbers left to accommodate the proliferation of cars that are likely to launch in that area so I think it’s safe to say that there will be some changes but that’s all that is really clear for now.”

British-born Horton, who first joined BMW Great Britain in 1995 and led BMW in the Middle East for the past seven years, is well aware of the potential pitfalls associated with going for volume.

 center imageFrom top: BMW Australia managing director Phil Horton, new 1 Series hatch, BMW i concepts.

In the UK, for example, BMW sells more 3 Series vehicles than Ford does Mondeos, but Mr Horton is confident the Australian market has sufficient growth potential for BMW without diluting the brand.

“I think we can see from other markets in the world that we can grow our volume quite significantly and not lose exclusivity.

“In some more mature markets like the UK, for instance - where there has been a very heavy focus from the premium manufacturers on fleet and rental business with lower-spec cars - maybe the brands have lost some of that cachet.”

Mr Scott reasoned that even though a brand’s volume-seller might lose some appeal by becoming too commonplace, it has little impact on the rest of the model line-up.

“In markets such as the UK where the 3 Series is a particularly popular fleet model and is consistently voted fleet car of the year it doesn’t really detract from the cachet or appeal of, say, a 5 or 6 Series.”“In terms of the potential for growth a mature market such as Germany the premium segment accounts for a market absorption of up to 30 per cent, so that would suggest that all the brands still have a lot more room to play with in a market like Australia.”

In an attempt to face off this year’s arrival of the facelifted C-class, which has helped Mercedes sell 2112 C-class sedans and wagons YTD (down 16.8 per cent) compared with 3 Series sedan/wagon sales of 1647 (down 23.5 per cent), BMW has increased the value of its entire 3 Series line-up by adding extra standard equipment and dropping prices.

The 3 Series price and specification changes came into effect from February 11 and were quietly revealed in April (as GoAuto reported at the time). However, the full extent of the equipment upgrades were only formally publicised to journalists this week.

Mr Scott said the reason for this was that BMW had to clear existing stock not fitted with the extra equipment.

“We’ve just allowed that stock to move through and the real reason for publicising it now is that the only cars that we have in stock are specified according to this offer.”

Asked whether the timing relative to the Australian release of the updated C-class was coincidental, Mr Scott said: “I think it’s fair to say that this is a reaction to the increasing competition in the segment but the precise timing is down to removing a stock lag rather than attempting to coincide with the arrival of anyone else into the market.”

The 335i M Sport Touring and petrol-engined 325i, 335i and M3 variants of its 3 Series sedan, coupe and convertible range offer up to 11 per cent more value and cost savings of up to $9500.

The prices of faster-selling entry-level and diesel models remain unchanged, although they have received some extra equipment, including 17-inch alloys, ‘Chrome Line’ exterior trim and a storage packageThe Innovations package – comprising satellite-navigation, voice control, high-beam assist, bi-Xenon headlights and electrically-folding door mirrors with automatic anti-dazzle function – becomes standard on all 325i and 335i sedans, coupes, convertibles and the 335i M Sport Touring wagon.

Combined with a $5000 price drop to $71,900 (plus on-roads), BMW claims the 325i sedan is $9100 (11 per cent) better value than before. The same reduction is applied to the sportier-looking 325i M Sport, now priced at $76,700.

The biggest value increase in dollar terms is on the 325i and 325i M Sport convertibles, which with the extra equipment and respective price drops to $94,600 and $101,100 work out $9500 – or nine per cent – less expensive.

At $80,850 and $86,050 respectively, 325i and 325i M Sport coupes are not far behind, with a customer saving of $9450 representing a 10 per cent discount.

Buyers of the rip-snorting V8-powered M3 flagship save $3300 ($3350 on the convertible).

BMW Group Australia product and market planning manager Toni Andreevski said the twilight of the E90 3 Series’ life had been interrupted by the facelifted C-class in the same way the previous C-class was launched during the final stages of the earlier E46 3 Series cycle – but this time updates have continued for the entire life of the E90 3 Series, which was released here in June 2005.

“The previous C-class was introduced during the runout of the old E46 and it was a similar story. It’s quite natural for a model to decline in volume throughout its life cycle.

“The key point was that rather than do nothing BMW has actually put quite a lot of effort into refining and improving the car right to the end of its life cycle to achieve the maximum result that it can. With the new F30 we would expect to come out quite strongly with the car and do very well in this segment.”

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