The Big Three German premium brands are all on track for record annual sales in 2011, although it remains to be seen how long the recent impressive global sales performance can continue.
IHS Global Insight Perspective | |
Significance | Audi and BMW have joined Mercedes-Benz by posting yet more record sales results in November, with the BMW Group exceeding its previous record annual sales total in the first 11 months of the year, while Audi is also on target for a record full-year sales total. Audi and BMW sales were up on a monthly basis respectively by 28% and 7.7%. |
Implications | Despite concern over the potential effect of macroeconomic turbulence in the Eurozone demand for the biggest three premium car brands remains extremely robust, fuelled by the ongoing sales surge in China. As a result Audi, BMW and Daimler have all announced limited Christmas holiday periods at their main German and European production sites. |
Outlook | All three companies are enjoying unprecedented demand for their models with new model launches and an increasing number of niche versions of existing model lines also helping to drive the global sales increases. Audi, BMW and Mercedes-Benz have also benefited from demand from increasingly brand- and status-conscious emerging markets with China leading the way, although high base levels and uncertainty about economic development moving into 2012 means that accelerated ongoing demand from China cannot be assumed. |
The Volkswagen (VW) Group's Audi brand and the BMW Group have followed their main rival Mercedes-Benz's announcement of yesterday (see Germany: 6 December 2011: Mercedes-Benz Cars Posts Record 8.9% Rise in November) by announcing further record sales for November which has ensured a record annual sales tally for both. Audi sold 111,400 units in November, which equated to a highly accelerated uplift of 28% year-on-year (y/y) This figure helped propel Audi to a year-to-date (YTD) sales total of 1,193,100 units for the first 11 months of the year, an 18.8% y/y increase on last year's 1,003,905 units. Audi had exceeded its 2010 full-year sales figure by the end of October and is well on course to achieve its own full-year sales target of 1.3 million units. Audi's accelerated sales increases have been supported this year by ongoing strong sales of its B-segment entry-level A1 model which was launched last year. While in recent weeks Audi has also experienced another uplift from the official market launch of the new Q3 compact SUV. Audi also remains the leading premium brand in China and has further consolidated this position in 2011 with sales rising by 35.2% y/y to 283,600 units, with sales in November tallying 29,651 units, which equated to a 68.8% y/y rise. Audi is also enjoying record market share in Europe despite the tough current macroeconomic climate. It is on target to sell 250,000 units in its home market of Germany for the first time since 2008, while its sales are also holding up well in the rest of the region. Audi sold 59,900 units in Europe during November, an uplift of 17.8%, with sales of 12.6% in the first 11 months of the year, equating to a sales volume of 670,300 units. The company also delivered 104,906 units in the US up to the end of November, an increase of 15.2%. In November, 9,700 vehicles were sold in the country, a rise of 3.6%.
BMW has also enjoyed robust sales rises in November and for the YTD. In Group terms it sold 138,878 units during November, which translated to an increase of 7.7% y/y. However, this actually represented a slowdown on the YTD growth rate of 14.5% y/y, which propelled the firm's overall sales for the period to 1,510,862 units. This exceeded the full-year 2010 tally and the pervious full-year sales record of 1,500,678 units which was set in 2007. BMW, like Audi and Daimler, has made very significant gains in the Chinese market in 2011, with sales rising by 40% y/y in the first 11 months of the year to 215,023 units. Sales in Europe have also showed a very positive development, rising 8.3% y/y to 775,834 units. German sales rose by 11.1% y/y to 270,116 units. The US market is also managing to sustain its current accelerated growth for BMW, with sales rising 14.8% in November to 22,883 units, compared to the 14.6% rise in the first 11 months of the year to 272,873 units.
As a result of the ongoing high levels of demand for the German-manufactured models of Audi, BMW, and Mercedes-Benz all three OEMs have announced curtailed Christmas shutdown periods. BMW and Mercedes-Benz will shut most factories for just one week between Christmas and New Year's Day, while Audi will close European plants for two weeks. Daimler spokesperson Martin Steinlehner said, "Because of the positive sales development, we'll only have short factory breaks at the end of the year."
Outlook and Implications
The extremely robust and impressive global sales performance that the Big Three premium OEMs has managed to achieve in 2011 is illustrative of their success in establishing themselves in the China and other emerging economies as consumers in such countries become more and more brand-aware and status-driven. The brand value of the three companies in question has never been higher and there ability to successfully branch out into new market niches is also driving sales, with Audi, BMW and Mercedes-Benz all currently in the process of developing an enhanced range of cars on the smaller B and C1 vehicle segments to supplement their success in their traditional market territory of D2 and E1 and the SUV segments. However, there must be doubts over the ability of three companies to maintain such high growth levels going forward given the current level of macroeconomic uncertainty that has become a features of the Eurozone in recent months, while there are also ongoing concerns over the potential for overheating in the Chinese economy, especially with reference to some worrying data relating to the falling level in property transactions that emerged two weeks ago. It seems inevitable that there will be a significant flattening in outright growth levels in China, if only as a result of the very high base levels recorded this year, and slowing growth in the world's largest market will also hit the leading premium OEMs. But for now the Big Three premiums are continuing to boost production and turn out new models, with vehicle like the new Mercedes-Benz B-Class and next year's A-Class, coupled with the new BMW 1-Series and the new F30 3-Series which will be launched in February, creating demand. The latter is an especially important car as the 3-Series is the world's best-selling premium brand car. As things stand IHS Automotive is forecasting flat sales momentum going into 2012. We also expect Audi's sales to plateau at 1.28 million units, with BMW recording 1.64 million units in group sales, slightly up on 2011's final expected total, with Mercedes-Benz cars also forecast to post a similar result in 2012.