Intense rivalry could hurt dominance of German luxury marques

Article by Andrew Christian, on August 27, 2014

A deepening rivalry between German luxury carmakers could pave way for other premium brands to surge once again. German luxury brands have been dominating sales, thanks to strong sales as well as huge returns from their products. But with other premium marques now offering dozens of new models against them, Audi, BMW and Mercedes-Benz may soon find their luster fading.

The German luxury carmakers have been also trying to outdo each other by offering deep discounts, which according to observers, tarnish luxury brands and create opportunities for the growing competition.

Their ubiquity on the streets have somehow made customers choose other premium brands like Jaguar Land Rover, which is offering a number of fresh vehicles targeted towards the German 3. Bernd Hoennighausen, an automotive consultant, told Reuters that German premium brands have sacrificed some of their exclusivity by entering smaller, volume segments like compacts.

He also noted that BMW, Audi and Mercedes have pushed volume with fleet discounts of around 20 percent. He said that this could open doors to younger players like JLR.

Other luxury brands challenging or a posing to challenge the dominance of the German luxury carmakers include Maserati, Alfa Romeo, Infiniti and Volvo.

Andy Palmer, a senior Nissan executive who also serves as Infiniti’s chairman, remarked that their theory is that there is room for “something visibly different that is styled in a more provocative manner." He said that this theory has been proven true in China where consumers cross-shop and where Audi could lose market share since it has been so dominant. [source: Reuters.com]

Topics: germany

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