[pvnair]

German luxury car manufacturer Audi is on a dream run. In 2000s they had set a target of becoming the top luxury car manufacturer by 2015, mainly overtaking their German rivals Mercedes and BMW. For which Audi had targeted the developing countries mainly China, to fulfill their ambition and it seems to be worked. China remains Audi's biggest single market, having already delivered 370,559 vehicles from January to November 2012.
Audi aims to sell at least two-million cars a year to overtake BMW by 2020. According to Bloomberg, Audi- the world’s second-ranked luxury-car maker, outlined a program to spend 13 billion euros ($17 billion) through 2016 developing models and adding production with the aim of overtaking premium-market leader BMW.

[volkman10]

BMW maintains lead in 2012. Fourth year in a row! Audi closes in second and Merc a distant third.

But perhaps it is not all hunky-dory for the Bavarian automaker. When you look at the sales figures of the top three luxury automakers in India, you will see some startling facts –

• BMW sold 9,375 units
• Audi sold 9,003 units
• Mercedes sold 7,138 units

http://indianautosblog.com/2013/01/b...#ixzz2HSZDEqt1

[arvi86]

Originally Posted by volkman10

BMW maintains lead in 2012. Fourth year in a row! Audi closes in second and Merc a distant third.

But perhaps it is not all hunky-dory for the Bavarian automaker. When you look at the sales figures of the top three luxury automakers in India, you will see some startling facts –

• BMW sold 9,375 units
• Audi sold 9,003 units
• Mercedes sold 7,138 units

Wow, those numbers by Audi are startling, to say the least. Being the latest and youngest of the German trio, it's amazing to see the faith Indians have reposed onto Audi. I guess BMW is going to have a tough time in 2013 unless they launch volume-churners like the 1 Series and 2 Series.

Hello Mercedes-Benz, are you listening? Bring on the A, CLA and locally-made B, really quick!

[volkman10]

Audi is new automobile supplier of the IOC.

The automotive sponsor of the International Olympic Committee for the past 22 years has been Daimler-Benz. No more

Five rings are now driving four rings: Effective immediately, Audi is the new automobile supplier of the International Olympic Committee, equipping the organization's fleet in Lausanne plus international IOC events with Audi models. In addition, there are plans to jointly develop projects, for instance in the area of Corporate Responsibility, within the scope of the suppliership.

http://www.autoblog.com/2013/01/12/a...ioc/#continued

[Activ8]

Originally Posted by ajmat

I would not dismiss the figures too much .... Mercedes are making better margins - by deduction, the S class sold 736 units. The E and C prices are much higher than the 3&5 translating to bigger margins. However BMW are doing slightly better in the SUV area. Am sure the ML is discounted.

Data

Here's some facts that might make your deductions look a bit premature ~

(1) Old one: http://www.bloomberg.com/news/2011-0...expansion.html

(2) Audi better than BMW: http://www.autospies.com/news/BMW-Q3...-Audi-s-73275/

(3) 2012 US Snapshot: http://money.cnn.com/2012/11/15/auto...une/index.html

BMW has historically had very high profit margins compared to Benz ... 11% in the 80's and 90's and rising to 14%+ today. By comparison, Mercedes has much lower profit margins (~ 6%) even while selling at a higher price point. The prices for the cars in the US differ from BMW only in who has the more pricing power. The S-class retails for much above its competitors, simply because it can. Not so for the E and C which retail at or below BMWs prices these days because they simply can't price it higher.

So, yes, I'd take Mercedes' growth figures lightly and rightly so. A simple visit to the 2 museums (Benz in Stuttgart & BMWs in Munich) tells you a similar story. While Mercedes has the richer history and so many vehicles to display, BMW has just done a much better job.

[ajmat]

Originally Posted by Activ8

Data

Here's some facts that might make your deductions look a bit premature ~

(1) Old one: http://www.bloomberg.com/news/2011-0...expansion.html

(2) Audi better than BMW: http://www.autospies.com/news/BMW-Q3...-Audi-s-73275/

(3) 2012 US Snapshot: http://money.cnn.com/2012/11/15/auto...une/index.html

BMW has historically had very high profit margins compared to Benz ... 11% in the 80's and 90's and rising to 14%+ today. By comparison, Mercedes has much lower profit margins (~ 6%) even while selling at a higher price point. The prices for the cars in the US differ from BMW only in who has the more pricing power. The S-class retails for much above its competitors, simply because it can. Not so for the E and C which retail at or below BMWs prices these days because they simply can't price it higher.

I am talking within India. Let me state the following facts

1: Until recently. Mercedes were not discounting their cars so heavily
2: Mercedes assemble their engines via Force Motors so their duty structure is lower
3: Mercedes also paint their cars here lowering the duty strucutre further

BMW and Audi merely imports kits and knock em together. Add to that the discounts they offer and you can deduce their margins would be much lower

[rrsteer]

I have always analyzed the products & product performance of Mercedes, BMW and Audi with great interest. Personally, Mercedes is my favorite, but without doubt BMW and Audi have outperformed it lately.

Below is an expert analysis on Mercedes' future prospect globally. I thought some of you might like it. Be warned, it might hurt a Mercedes fan.

But contrary to what the analyst below suggests, I much like the fact that Mercedes' board comprises of the lowest number of 'outsiders'. I think this would help Mercedes to not loose sight of the historical values that underlines the brand. Personally, I don't want Mercedes to be very aggressive in building market share. The fan in me ( yeah, who has no financial strings attached or numbers to worry about) just hopes that the brand takes an alternate route without worrying about market share and builds cars with the same set of values that it was always known for.

We take a fresh look at the German auto makers following a change of primary analyst. Specifically, we place significant focus on Daimler; a company which has underperformed peers both as an investment (by -60.8% since Dec 2008) and as a business since the 2008/9 crisis but which has ambitions to become the largest premium car maker, selling 2.6mn units, by 2020. However, our conclusions remain aligned with our prior views;
namely we believe Daimler will continue to underperform both BMW and Volkswagen:

1) Daimler wants to grow itself out of trouble, aiming for 2.6mn units by 2020: While the merits of such aggressive growth for a premium business are debatable, our analysis shows that even if we assume a unit CAGR of 6.4% between 2011-15, unit sales are unlikely to be sufficient to close the current margin gap with BMW and Audi given incremental volumes are set to come from lower-yielding smaller vehicles. Hence, we believe Mercedes’ margin will not meet its 10% target by 2015 and absolute EBIT will merely match BMW’s auto EBIT as of 2012.

2) Lack of corporate oversight suggests objectives insufficiently stretched: Daimler has possibly the strictest corporate governance framework among the German OEMs with executives’ incentives also most closely aligned to shareholder interests. Part of the issue at Daimler is that the company has the lowest number of board members with external experience, 29% vs 56% at VW. Although we would avoid trying to quantify the abilities of managers with external backgrounds versus those who have spent their entire careers at one company, we believe there is a risk that less external experience could make management inward-focused and less competitive. In addition, we note the lack of a large shareholder on the supervisory board, unlike at VW, BMW and Conti, which could contribute to less stretched objectives and less pressure to meet targets.

3) Lower volumes, following weaker growth, suggest M-B will have higher costs per unit given future Capex and R&D spend is likely to be similar across OEMs: With this in mind, it is easy to understand why Daimler wants to become the largest premium player, targeting 2.6mn units by 2020. The problem is that the competition is not resting and even if we allow for exceptional growth at Mercedes we still anticipate R&D and Capex ratios (c7% and c6% of sales) to be higher than those at BMW and
Audi.

4) Capex is set to grow at a CAGR of c7.0% at premium OEMs over coming years, and history suggests that BMW and VW are more efficient at capital
deployment: Based on increases in capital employed between 2007-13E, we
estimate that BMW has generated incremental NOPAT equivalent to 94% of the capital spent, while for VW this figure is still 12.8%. However, with Daimler’s 2013 earnings lower than in 2007, on our forecasts, the company has delivered a negative return on incremental capital invested of -4.8% between 2007-2013E.

5) Mercedes’ failure to capitalise on high-growth segments will take time to
address with new models not guaranteeing future success: Despite being a) the first German premium maker to offer a luxury SUV, small cars, and b) the brand best positioned to capitalise on the evolution of the “Absolute” segment, Mercedes has failed to hold/gain share in growth segments, resulting in under performance. Between 2006 and 2012E, BMW and Audi SUV sales will have grown at a CAGR of 15.1% and 29.1%, respectively, vs only c11% at M-B. Daimler bulls may hope that the 2013 S-Class and facelifted E-Class will provide a lift to earnings and subsequently the equity value. However, we show that S-Class and E-Class have lost >5% share
with each new model over the last c20 years, a trend that is likely to persist.

6) BMW and Audi are quicker to adapt as the premium business model evolves, SUVs attract retail customers and the highest margins: A key differentiating factor between premium car makers has been the ability to foresee evolving consumer trends. BMW and Audi have reacted more successfully than Mercedes, leveraging retail customers’ increased preference for SUVs rather than executive sedans. We estimate current margins on a BMW X5 reach 12% compared to no more than 4.5% on a Mercedes E-Class.

7) Truck opportunities look greater at VW given MAN restructuring and on-going CV integration: While Daimler remains the largest European truck maker, we believe that VW’s truck exposure is preferable. Not only are significant self-help opportunities available to VW as MAN Truck & Bus restructures and the group continues to further integrate its CV operations but, importantly, 2013E truck end market growth is likely to be greatest in South America where VW through MAN and Scania has the greatest
exposure.

[gomzi]

Originally Posted by Jeroen

Anyway, so there are Lexus owners out there that don't give a rats *** about convention and or badge. And just buy a Lexus because from an engineering point of view it's a stonking good car. I for one, can appreciate that. Anybody that behaves highly individually and autonomously gets my vote any day.

Jeroen

And that makes your friend an enthusiast! I really dont believe you can comprehensively categorize people into enthusiasts or otherwise based purely on the car they drive.
The car they drive depends on a number of factors starting with its price. Heck even buying a Maruti Alto or a Tata Nano can be a highly individual and autonomous decision. Doesn't necessarily mean the buyer is or isn't an enthusiast.

[Jeroen]

Originally Posted by gomzi

And that makes your friend an enthusiast!

No, it makes him an engineer.

[Jeroen]

Originally Posted by rrsteer

But contrary to what the analyst below suggests, I much like the fact that Mercedes' board comprises of the lowest number of 'outsiders'. I think this would help Mercedes to not loose sight of the historical values that underlines the brand. Personally, I don't want Mercedes to be very aggressive in building market share. The fan in me ( yeah, who has no financial strings attached or numbers to worry about) just hopes that the brand takes an alternate route without worrying about market share and builds cars with the same set of values that it was always known for.

Interesting point of view. And I do share your sentiment. Give me a Peter Morgan or a Peter Wheeler as CEO of a car company anytime. Never heard them talk about CAGR or EBIT. They just talked about cars. Ok, so especially TVR is going through a very rough patch indeed. Few would argue that Peter Wheeler was an extremely passionate petrol head.

The very fact that these three brands are mentioned in one and the same breath, one and the same comparison is a pretty good sign that whatever they produce is just a commodity. It is in essence mass production for a mass audience. No real outstanding differentiating factors.

Now put a Morgan or a TVR next to an Audi, BMW or Mercedes and everything will be different. It's simply no comparison. I'm not interested in how a car manufacturer does financially, I'm only interested in what he produces and I don't like to be associated with "masses". Sometimes there is no avoidance.

I was one of the very first Iphone users and was getting increasingly worried that every Tom, Dick and Harry has one these days. I was seriously contemplating doing away with mine. Why would I want something that everybody else has? Luckily I read an article today which stated that Iphones have become extremely uncool, in at least the Netherlands. My own daughter calls my Iphone: "so 2010". Anybody under 24 doesn't want be seen dead with an iPhone. That's good news as soon I'll be back to my Exclusive user-niche. Mind you, likely they'll all be a bunch of old farts like myself.

When it comes to cars, I'm the same. I don't like main stream. And Audi, BMW and Mercedes are main stream for the high end segment. They are the Nano of the high end segment. Cars for the masses.

I've owned a number of Audi's, BMWs and Mercedes (and still own a Mercedes), and for work, when you need a very reliable, very comfortable car they are great. But they never put a smile on my face, such as my Jaguar or my Alfa Romeo. Both notoriously unreliable. Oh and British and Italian cars still rust, believe me.

Jeroen

[GTO]

Originally Posted by volkman10

• BMW sold 9,375 units
• Audi sold 9,003 units
• Mercedes sold 7,138 units

Meanwhile, Jaguar-Land Rover are in a distant 4th. JLR sold 2393 cars in 2012, compared to 1813 cars in 2011.

[nitrous]

Originally Posted by GTO

Meanwhile, Jaguar-Land Rover are in a distant 4th. JLR sold 2393 cars in 2012, compared to 1813 cars in 2011.

For a brand that has miniscule presence and no product to compete in the 3-series/C class/ A4 segment, that figure isn't bad at all.

That said, they seem to be focusing on the Chinese market the way Suzuki is on India.

[Sahil]

Originally Posted by nitrous

For a brand that has miniscule presence and no product to compete in the 3-series/C class/ A4 segment, that figure isn't bad at all.

That said, they seem to be focusing on the Chinese market the way Suzuki is on India.

But these figures will only get better in this coming year with the 2.2 diesel heart for the XF. The freelander too will be facelifted.

GTO- Do you have the breakup of JLR sales model wise?

[riteshritesh]

Originally Posted by Jeroen

My own daughter calls my Iphone: "so 2010". Anybody under 24 doesn't want be seen dead with an iPhone.

Jeroen

Sorry for the inquisitiveness.
Which phones do the under 24's run after these days. I too will steer clear from them.

[Jeroen]

Originally Posted by riteshritesh

Sorry for the inquisitiveness.
Which phones do the under 24's run after these days. I too will steer clear from them.

Samsung Galaxy. Apparently, its a global trend now also reported in India:

http://articles.timesofindia.indiati...ce-millennials

Jeroen