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Customer LoginsCan Mercedes-Benz maintain its lead after taking top spot in the global premium market during 2016?
In this article, we look at IHS Automotive's volume premium sales forecasts for the "big three" German OEMs as Mercedes-Benz stands on the cusp of deposing BMW as the global best-seller for the first time in a decade.
- Significance: Following the release of volume premium carmakers' sales figures for the first 11 months of this year, Mercedes-Benz looks certain to overtake BMW to become the biggest-selling premium brand in the world in 2016. Here we look at Mercedes' prospects of retaining this lead in the medium term.
- Implications: In particular, we look at forecast data for between now and 2020 and assess the relative anticipated performances of all the "big three" German premium carmakers, with a focus on what models and markets will drive growth.
- Outlook: As far as IHS Automotive forecasts are concerned, the Mercedes-Benz passenger car brand will maintain the lead it will establish in 2016 between now and 2020, helped by faster growth than its peers in China and further expansion into new model niches, with a particular focus on tailoring models for that market, such as the forthcoming A-Class sedan.
This week, Daimler CEO Dieter Zetsche acknowledged that for the first time since 2005 Mercedes-Benz would overtake BMW as the best-selling premium car brand in the world, four years ahead of the OEM's original target of 2020. Speaking about the achievement, Zetsche said that observers laughed back in 2011 when Daimler set the target. He said, "We will achieve it this year, four years ahead of time." For the full year 2016, the Mercedes-Benz passenger car brand is forecast to sell in the region of 2.05 million units. This compares with forecast tallies of 1.95 million units for BMW and 1.89 million units for Audi. The big question is: now that Mercedes-Benz has achieved this lead, can it maintain it over the next few years?
China
China will play a big part in answering this question. China is the biggest single market for these premium brands and increasing volume sales here is imperative for their global growth strategies. Despite Mercedes having the lowest sales volumes in China of the three German premium brands, it has the fastest growth rate. This is thanks to parent company Daimler having strengthened its local production line-up in recent years; this has resulted in strong growth for the brand. Audi is the strongest of the three brands in terms of sales volumes and brand penetration in China. Meanwhile, BMW is on a mission to boost its presence in the country by adding dealerships and promoting second-hand model sales to develop brand loyalty. IHS Automotive light-vehicle production forecasts for this year show that Audi will build more than 572,000 units in China, Mercedes around 340,000 units, and BMW approximately 320,000 units. IHS Automotive light-vehicle sales forecasts indicate that in 2016 Audi will sell more than 600,000 units in Greater China. In the first 11 months of this year China accounted for 29.8% of global sales for Audi, 25.9% for BMW, and 22.7% for Mercedes. If we look forward to 2020, how do these percentages change? According to IHS Automotive's latest forecasts, Audi will find it difficult to derive much growth in China between now and 2020, with sales rising from a forecast figure of 600,000 units in 2016 to just 636,000 units by 2020. This will equate to China accounting for 32.4% of Audi's global sales by that point. As for Mercedes-Benz, its volumes are set to rise from 340,000 units in 2016 to 589,000 by 2020. This will see China's contribution to Mercedes' global sales rise to 26.7% by 2020. Meanwhile BMW's Chinese sales are forecast to rise from 320,000 units in 2016 to 567,000 units in 2020. This will see the BMW passenger car brand's Chinese sales rise as an overall percentage of total brand sales to 26.5%in 2020.
Europe and the US
We can see from the combined sales development analysis for all three brands between 2016 and 2020 that by far the biggest growth-generating market in the volume premium segment will be China. In contrast, the mature markets of Europe and the United States are stagnating in terms of overall top-line sales growth, as well as for the premium brands, which have built their businesses in these markets to a high level of penetration in terms of presence and segment offerings. In Europe (including Russia) between 2016 and 2020, Mercedes-Benz will perform the strongest, with a forecast 2016 sales figure of 829,000 units rising to 930,000 units across the region by 2020. BMW will add almost exactly half as much volume as Mercedes-Benz in this period, with an increase from 853,000 to 904,000 units by 2020. Again, it is Audi that will see the slowest growth across this region during 2016 to 2020, with volumes rising by around 36,500 units to 880,380 units by 2020. In the US, the market will develop at a steady rate as a result of its maturity and increasing premium competition from Japanese and domestic rivals. Between 2016 and 2020, Mercedes, which is the market leader in the US, will see its sales rise from 346,000 to 359,000. BMW's US sales will rise during the same period at a faster rate according to our forecast, from 316,000 to 346,000 units, helped by the launch of the x7 in 2019, while Audi's will rise from 212,000 to 241,000 units in 2020.
New model launches
There are a number of key model launches that will fuel sales for all three brands between now and 2020. Mercedes is planning a new A-Class sedan model that will be a brand-new addition to its range and which will slot into the line-up below the CLA at a cheaper price point. This model will be one of the key drivers of sales growth in China following its launch, according to IHS Automotive forecasts (the model is referred to as a "compact sedan" in our forecasts). This model will add almost 120,000 units to the Mercedes-Benz brand's global sales tally by 2019. Likewise, BMW will introduce the 1-Series sedan in China next year, having shown it at the Guangzhou Motor Show recently (see China: 24 November 2016: Guangzhou Motor Show 2016: BMW launches 1 Series exclusively for China). This model will boost global sales of the 1-Series to 210,000 next year from 176,000 this year. Audi already has the A3 sedan, which continues to sell well in China. All three companies will also continue to expand their crossover and sport utility vehicle (SUV) ranges across all segments. Audi will launch the Q4 compact coupé crossover model in 2020, while the range-topping Q8 will also be added to the range by that point, and the recently launched Q2 will add more than 100,000 units to Audi's sales tally between 2018 and 2019. In addition, the new A6 will lift sales for the Ingolstadt brand from the mid-point of 2017, with sales rising from a forecast 37,000 globally in 2016 to 57,000 by 2018. BMW's most important model launch programme between now and 2020 will be the renewal of its core passenger car ranges, with the new 5-Series just having made its public debut; sales of this model will come on stream next year. It will be closely followed by the third-generation 1-Series in 2017 and the next-generation 3-Series in 2018. The X2 will also give BMW a further offering in the compact crossover segment from 2018, with the model adding more than 60,000 units to the brand's global sales tally from 2018.
Outlook and implications
In November, China was the biggest single market for all three German volume premium brands, perfectly illustrating the huge strategic importance of this market for the companies. As we have seen, Audi's volume figure in China will remain relatively steady between now and 2020, with the company arguably suffering in terms of its ability to generate growth from its position as market leader and from being the longest-established foreign premium brand in the country, with consumers more willing to look at alternatives in what is an increasingly advanced and discerning consumer economy. As we have seen, the other big global markets for volume premium models, Europe and the US, will offer relatively limited growth opportunities for Mercedes, BMW, and Audi between now and 2020. Will Mercedes-Benz maintain the number-one position it is set to take this year over the next few years? The answer is "yes" according to our most recent forecast. Mercedes is set to stay in front between 2016 and 2020, with a combined passenger car brand sales tally of 2.21 million units by 2020. This compares with a figure of 2.14 million units for BMW and 1.96 million units for Audi. This is huge vindication for Zetsche's vision and strategic leadership for the Mercedes-Benz passenger car brand. It has witnessed a product-led revival typified by expansion into new segments, a focus on interior and exterior styling, a remoulded brand image, and also vastly improved dynamic qualities and technology.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.