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BMW and Audi in battle for supremacy

Audi and BMW really do care about beating each other up. Selling more cars is vital to corporate esteem; getting better reviews for innovation matters a lot.

But at this time of year it is all about the size of your wad. Audi got first crack at it and announced its annual financial results on March 8. BMW opened the books a week later on the 15th.

What the format of the results conferences highlights is that interest in, and demand for, premium cars is rapidly moving across the world and whatever the German makers do and announce, they have to make available in many varying formats in many markets.

Mercedes is still somewhat aloof, and Jaguar’s revival is still in progress.

But Audi and BMW are full-on in terms of the determined way in which they try to establish their superiority in the premium market.

Dr Norbert Reithofer, BMW CEO, was very quick to land a blow on the opposition when he presented his results. His second sentence was: “We are the world’s most successful premium automaker and we continue to set new standards in our industry.”

The unarguable justification for his claim is volume. BMW made 1,460,000 vehicles last year (of that, BMW sold 1.22 million, Mini was up at 234,000 and Rolls set a new high of 2,711) and made €4.8 billion of profit.

The share price has been storming along. You would have made 80% on your money had you taken the plunge last year.

The forecast is more of the same and at least 1.5 million cars this year.

BMW had the highest market share gains in Europe in February at 5.2% compared to Daimler at 4.5%. BMW plants launched 14 new models between them during last year.

At the start of 2010 the plants were on short time, but by the fourth quarter demand was back; by the year end the factories around the world had built 100,000 more cars than 2009.

“Never before have we made so many cars in a three month period.”

The UK is a huge market for BMW, but has dropped a place in its significance. China has pushed it out of third place behind Germany and the US.

In BMW-speak China is no longer referred to as an emerging country. As far as the carmaker is concerned it has emerged. There is a new plant coming on stream in Shenyang that will start production next year. It is designed to make 150,000 cars a year – most of which will be the X1.

There is a good old row going on with the Chinese authorities at the moment which insist that BMW should pay the same tax on CKD cars as they do on fully built-up. What kind of madness is that, BMW directors enquire.

Audi has to be less boastful about its position in the premium carmaker stakes.

“We want to be the world’s number one premium brand,” said Axel Strotbek, the Audi finance director. For him also, bigger is better.

"He starts from a better place than BMW because he has Bank of Volkswagen to fall back on in an emergency, while BMW is one of the world’s smallest, major car companies and needs to fight for survival when unit cost of components is all about the number you buy.

The rise in Audi’s profit last year – it nearly doubled to just over €2bn – was driven mainly by additional car sales. The A4 was the fast mover, but A5 and Q5 made big contributions.

Audi sales are going up-market as a natural consequence of the growing esteem the brand is enjoying. The new A8 was a huge gamble.

It was a vast improvement on the outgoing range-topper, but had little momentum against S-Class and 7 Series

But worldwide sales have doubled as the top of the range has been augmented also by A5 and Q7 from which revenue has been “highly satisfactory”, according to Strotbek.

In the UK, there is some alarm at Audi delivery time being overwhelmed by demand. The distributor always used to work on a maximum of three months and that is now routinely stretching to four.

Audi and BMW are neck and neck. In February, Audi won with sales of 3,783 compared with the Bavarian’s 3,577. But the year to the end of February was a victory for BMW, which registered 12,303 to Audi’s 12,085.

In western Europe, Audi wins with 613,697. BMW had 596,068. The new A1 is going to be a substantial advantage for Audi.

It brings in a new, low starter price and will shortly be available as a full electric with a range-extender petrol or diesel engine.

Audi plans to “make electric sexy”.

Next year there will be an all-electric R8 which is designed to show that a car can be fun even when it is run off the mains.

UK is benchmark for Audi

Peter Schwarzenbauer, international sales and marketing director for Audi, said: “The UK for us is a benchmark market. We want all our dealers to be solus-Audi and we are a long way from getting there.

“But the UK has it already and we learn from them. We will deliver a much improved brand message as a result of being totally in control of our distribution,” he continued.

“We measure our key performance indicators and we are better than Mercedes and BMW. The UK is easier in that it is focused on C and D-segment cars.

"The advertising has been very successful with the use of Vorsprung Durch Technik and we have looked closely at how that works and will introduce it elsewhere in the world.”

E-tron will be Audi’s electric car sub-brand.

“It will stand for the type of e-mobility the various cars are using. We are not concerned about the growing complexity of power sources. In fact, we welcome them.

“We will have four categories: diesel, petrol, plug-in hybrids and E-tron. There is growing congestion around the world and consumers understand the need for lower vehicle emissions and view these new cars as a normal part of the brand,” added Schwarzenbauer.

Greener BMWs without compromise

Ian Robertson, the only non-German on the BMW board, is international sales and marketing director. He has decided that BMW will have two sub-brands. At the bottom will be the i-brand. At the top will be the M.

His premium brand strategy is to ensure that whatever needs to be done to suit the greening of the car, will be done without compromise.

When stop-start was introduced to help with the C02 figures, it was ensured that there would be no loss of performance.

“All the opposition lost horsepower when they introduced fuel savers,” he said. And yes, there will be ‘active sound’. Drivers want some audible accompaniment to the changing workload of the engine.


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