The Big Three German volume premium brands have enjoyed another strong year, but for the first time in a decade Mercedes-Benz will lead the pack.
IHS Markit Perspective
- Significance: Audi has posted a 4.3% y/y increase in sales during November to 154,050 units, with the firm's YTD sales rising by 4.2% y/y to 1,713,900 units, according to a company statement.
- Implications: This premium brand sales results for November confirm that Mercedes-Benz will be the best-selling volume premium brand in the world for the first time since 2005 as it currently leads BMW by 70,000 units with just one sales month to go.
- Outlook: The fact that Mercedes-Benz has overtaken its two great rivals after a moribund period of undesirable designs and poor quality in the last decade is testament to the strategic vision of Daimler CEO Dieter Zetsche and the standard of new models the firm has launched in the past five years.
Audi has announced that its sales increased by 4.3% year on year (y/y) in November to 154,050 units, almost exactly in line with the uplift the brand experienced in the first 11 months of the year, with sales rising by 4.2% y/y in the January to November period to 1,713,900 units, according to a company statement. The Ingolstadt-based manufacturer posted strong growth in its home region, as was the case with its other premium volume rivals, with a 9.5% y/y increase in sales volume to 68,200 units. There were particularly strong results in the United Kingdom, where sales rose by 18.0% y/y to 12,970 units, Italy, up 18.8% y/y to 5,570 units, and Spain, with a 24.7% y/y increase to 4,176 units. Demand in Europe was driven especially by the launch of two key new models; the second-generation A5 and the Q2.
In China, where Audi has maintained its position as the market-leading premium brand since it entered the market, sales increased by 6.6% y/y to 52,776 units, driven by the Q3 which was up by 46.8% y/y, while the sales development of the A3, which in China predominantly means the sedan body style, sales rose by 31.0% y/y to 8,529 units. Meanwhile, In the YTD Audi's sales rose by 5.7% y/y in China. In the US market, which has proved difficult for the premium OEMs in 2016, Audi managed to maintain positive growth, with a 2.5% y/y uplift in November to 17,118 units, while YTD sales rose by 2.9% y/y to 187,018 units.
Outlook and implications
The confirmation of Audi's sales numbers for November and the first 11 months of the year has all but assured that the Mercedes-Benz passenger car brand will be the world's best-selling volume premium passenger car brand for 2016. This is the first time in a decade that it will have taken the title, having been overtaken by BMW in 2005, and subsequently pushed down to third by Audi. Mercedes' recovery in the volume premium market has been enabled by strong strategic leadership from the management team of Daimler CEO, who has spearheaded a product lead revival typified by sharp design, increased connectivity and user friendly operating systems, efficient and powerful powertrains and perhaps most importantly a much-expanded product portfolio in terms of sub-D segment models and SUVs and crossovers. In the first 11 months of the year the Mercedes-Benz passenger car brand has posted sales of 1,893,000 units. This compares to the figure of for the first 11 months of the year to 1,824,000 units for the first 11 months of the year and Audi's tally of 1,714,000 units. Mercedes-Benz's near-70,000 unit sales lead moving into the final sales month of the year is unassailable. Commenting on achieving the goal earlier in the week, Daimler CEO Dieter Zetsche said, "We will achieve it this year, four years ahead of time". He was referring to the brand's 2020 target of becoming the world's biggest premium marque which was set back in 2011. Mercedes is also on track to meet its 10% return on sales target, so it has also achieved the key target of profitable growth. BMW and Audi will not rest on their laurels though; BMW is in the process of revitalising its core passenger car range with the launch of the new 5-Series, which will be followed in successive years by the new 1-Series and 3-Series. Audi will benefit next year from the first full year of Q2 sales, although it looks like other key recent launches such as the A4 may have slightly underwhelmed in terms of their initial sales impact. Later this week IHS Automotive will offer a full report on how we expect the volume premium market to perform between now and the end of the decade, including the impact of key new model launches and range additions.
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