In the back and forth between Mercedes and BMW for the lead in luxury sales in America, Mercedes pulled ahead last month. Because its sales are also growing faster than BMW’s, Mercedes should keep the lead for the balance of this year.
In April, Mercedes sold 31,949 vehicles, up 13% year over year. For the first four months, sales have reached 115,664, up 9%. Mercedes is on a trajectory to sell 300,000 cars this year. On the other hand, BMW sold 26,952 in April, up 6.9%. For the first four months, sales were 105,444, up 8.1%. Mercedes has sold more cars this year than Volkswagen has.
BMW sales, not surprisingly, were dominated by low-priced models. Sales of its 3/4 Series rose 5.9% to 10,374. The base price of the 3-model is $32,000. For the 4-model, it is about $40,000. The trend is both good and bad. Presumably, BMW makes more money on its expensive cars and light trucks. On the other hand, less expensive cars have appeal for younger drivers. If these customers like their BMWs, they can be moved up the model chain to buy much more expensive cars several years out. The problem with the strategy is that they may not stay with the company’s products, leaving BMW with low-margin purchases.
The Mercedes sales pattern was similar. In April, sales of its entry-level CLA were 2,670, up 69.5%. The model just above it in the price chain, the C-Class, posted 6,665 units sold, up 30.3%. The base CLA model has a starting price of $32,000, while the C-Class base model has a price of $38,000. Mercedes also needs these customers to trade up to its E-Class or S-Class.
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Mercedes and BMW need to contend with the fact that they are not alone. Competition from the two large American manufacturers is weak. Ford Motor Co.’s (NYSE: F) Lincoln and General Motors Co.’s (NYSE: GM) Cadillac are not a factor. However, Toyota Motor Corp.’s (NYSE: TM) Lexus sells well. And the number three German car company is gaining. April sales of Audi in the United States were 16,827, up 7.5%.
Competition aside, Mercedes and BMW will dominate luxury cars sales in the United States for years. Their leads are simply too great. That leaves them to battle one another, without interference from the outside.
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