BMW Brand's July 2013 Global Sales Rise 13.5% With YTD Sales Up 8.4% But Audi Narrows Gap

If Audi wants to win the global sales by introducing brand-diluting econocars, like the A1 and the Q1, that sits under BMW's lineup, I'm sure that's fine by BMW.

In European markets like the UK, the A1 (a glorified, rebadged VW Polo) had been the 2nd best-selling Audi, accounting for 16% of sold Audi's in the UK - actually ahead of A4 sales but behind the #1 A3 (15% and 25% respectively). That's a staggering more than 40% of UK sales that are based on sales of cheap A1's and A3's. In comparison, more 3 series are sold in the UK than 1 series.

Audi is already selling cheap Audi badged cars just to boost global sales. Worse yet, a cheap Q1 is still on the way. Jeez, talk about brand-dilution. It would seem that Audi would do anything nowadays to win sales. And people wonder why Audi remains a 2nd tiered among the luxury carmakers.

Guilty as charged: Here is Audi, desperate to win global sales, sneakily introducing brand-diluting glorified econocars like the A1...
http://www.youtube.com/watch?v=jmrvFPFrdJA

Here again is the devious brand-diluter Audi outselling BMW in their home country of Germany, both in July (21,814 vs 18,337) and in the first seven months of 2013 (150,063 vs 137,177).
What is it that the Germans understand about their German cars Audi and BMW... that makes the smarter Germans want to buy more Audis?
http://tinyurl.com/l6f2pjg

Audi Quattro with 600 HP
http://www.autobild.de/artikel/audi-quattro-sportwagenstudie-iaa-2013-4315919.html

German car mag comparison: mid-size luxury executive sedan (gasoline)
First Place: Audi A6 3.0 TFSI Quattro
Second Place: Mercedes E 400
Third Place: BMW 535i
Fourth Place: Cadillac CTS 3.6 AWD
http://tinyurl.com/mrckyac

German car mag comparison: mid-size luxury executive sedan (diesel)
First Place: Audi A6 2.0 TDI
Second Place: BMW 520d
Third Place: Mercedes E 220 CDI Blue Efficency
Fourth Place: Skoda Superb 2.0 TDI
Fifth Place: Jaguar XF 2.2D
http://tinyurl.com/mby8bmt

German car mag comparison:
Audi A7 Sportback 3.0 TFSI Quattro
Porsche Panamera 4
http://tinyurl.com/mxdkcne

American car mag comparison
First Place: Audi S6
Second Place: Mercedes E 63 AMG
Third Place: BMW M5
http://tinyurl.com/cqntdwx
http://tinyurl.com/6olv8mu

German car mag comparison:
Audi S6 sedan
BMW 550i
Dodge Charger SRT8
http://tinyurl.com/9oe3o74

German car mag comparison:
First Place: Audi S7 Sportback
Second Place: Mercedes CLS 500 4Matic Coupe
http://tinyurl.com/olmd6ku

German car mag comparison:
First Place: Audi S7 Sportback
Second Place: Mercedes CLS 500 4Matic Shooting Brake
http://tinyurl.com/mdatu2u

German car mag comparison:
Audi S7 Sportback
Porsche Panamera GTS
http://tinyurl.com/chydg5m

German car mag comparison:
Audi RS7 Sportback
Mercedes CLS 63 AMG S 4Matic Coupe
http://tinyurl.com/k9kk5ak
http://tinyurl.com/kvzmynl

Every intelligent and informed person -- i.e., people who haven't been trapped in a cave for 10 years -- has realized for several years that Audi is a Tier One luxury carmaker.

Forbes Magazine recognizes Audi as a Tier 1 Brand:
"Audi looks to mature. The automaker has been steadily heading upmarket and will continue.
Audi was a second-tier luxury brand not 10 years ago. The way it set about changing that has been methodical. One of the first big moves was poaching Scott
Keogh from Mercedes to be chief marketing officer.
Having worked at Mercedes for more than a decade, he knew about clout and creating what he calls “purchase confirmation.” “The truth about affluence is it’s all predicated on confirmation,” Keogh says. “This is why affluent people live in the same zip codes, go to the same country clubs, go to the same restaurants, talk about the same schools. It’s all this concept of confirmation.”
Back when he started at Audi, the company was going for a sort of under-the-radar mystique, looking to do “surgical marketing,” as Keogh calls it, to target only people in the know. The strategy he and his team have been implementing is different. It hinges on making the brand and its cars memorable to everyone. “What I wanted to make sure we did is that when someone purchased an Audi, they got that confirmation,” he says. “So you come roaring into your driveway in an R8 and little Tommy next door comes around and he’ll go, ‘That’s the car for me,’ or ‘That’s the car from Iron Man,’ or ‘That’s the R8 from Audi.’ Bam.”
After some racy Super Bowl spots—remember the R8 commercial that took a pot shot at old-school luxury with a spoof of the Godfather scene with the horse head in the bed?—and high-profile product placements in the Iron Man movies, Audi put itself on the pop-culture map.
The brand has gone from seventh place on consumers’ luxury-car shopping lists four years ago to second place today, Keogh says. The company set a record sales year in 2011, with an increase of 15.7% over 2010 for a total of 117,561 units. Tight inventory shows healthy demand, and average transaction prices are up by about $5,000 this year compared with 2010. (The trend line in Figure 11 shows a steady rise in Audi’s popularity among affluent consumers.)
The next step is to move further upmarket by focusing on selling more midsize and large sedans, as opposed to compact models like the A4, on which it has relied heavily in the past.
Having successfully climbed its way up the luxury-car ladder, Audi has created room for a new challenger: Cadillac."
http://images.forbes.com/forbesinsights/StudyPDFs/automotive-outlook_report.pdf

"Audi - Putting Old Luxury on Notice... Audi has a storied hundred-year history that equals that of its German counterparts, a motorsports record that tops even Porsche and Ferrari, and a world-class product that often outstrips its competitors in awards for design and performance... (Audi has a) culture of innovation that had persist

"Audi - Putting Old Luxury on Notice...
Audi has a storied hundred-year history that equals that of its German counterparts, a motorsports record that tops even Porsche and Ferrari, and a world-class product that often outstrips its competitors in awards for design and performance... (Audi has a) culture of innovation that had persisted through the company’s hundred-year history. No matter how big the obstacles or how loud the detractors, Audi pushed their vision of the future forward: August Horch, the founder of Audi, quit Mercedes-Benz when they refused to consider a frontmounted engine and started his own company; after World War II, when very last doorknob of the factory was disassembled and carted off to the Soviet Union, Audi began again; Audi developed a diesel racecar when everyone said it couldn’t be done -- and then proceeded to win LeMans six times in seven years, with the first and only diesel engine to ever win the title; Audi designed and launched a supercar the R8 that leapfrogged anything built by BMW and Mercedes-Benz and was called the “Ferrari-Killer” by Business Week magazine."

GreenMachine, you're analysis is wrong on so many levels that it shows you lack even a basic understanding of Audi's product portfolio, brand image and economics.

1) There is no Audi Q1. The smallest SUV Audi sells is the Q3. Your analysis only looks at the UK market and fails to look at Audi's sales breakdown by model line on a global basis.


2) BMW's 3-series accounts for 30% of the brand's annual global sales

http://acsblog.com/auto-review-2013-bmw-3-series-review.html

3) Audi is actually more profitable than BMW both in terms of overall profit and profit margin due to the cost savings it achieves by being part of the Volkswagen Auto Group and the ability to share parts and platforms with other VAG brands such as Porsche, Bentley and Volkswagen.

4) Audi's global sales only trail BMW's by some 21,000 units YTD. Most importantly, with Audi's launch of its new A3 Sedan later this year in Europe and China, Audi will deliver a highly-anticipated product in key growth markets for which BMW has no competitor for.

5) You seem to realize Audi is slowly but surely closing in on BMW's global sales lead and can only defend yourself by saying "And people wonder why Audi remains a 2nd tiered among the luxury carmakers".

That "2nd tiered" label would be your opinion. For a brand that outsells BMW in China and Europe, is more profitable than BMW both overall and in terms of profit margin and is rapidly closing the global sales gap with BMW having just outsold BMW for the 3rd time in 7 months, most people would not share your opinion that Audi is "2nd tiered".

actually the only people that think audi is a Tier 1 luxury company are you and satrani ( who I am sure will bring some sort of acceleration test about the RS and the TTRS and the Rs7 into the conversation. ) lol ...

Audi has been ranked the most sought-after luxury brand in China, ahead of BMW, Channel, Estee Lauder, Louis Vuitton.
http://www.digital-luxury.com/#!/2013/06/the-world-luxury-index-china-2013-the-most-sought-after-luxury-brands/

Certain status-conscious Asian cities and countries are a good barometer of how luxury goods are faring. For example, the city with the most Rolls Royce's per capita in the world is Hong Kong.

Today Audi is the fourth largest selling car brand in Britain -- after Ford, Vauxhall, Volkswagen.
http://www.best-selling-cars.com/britain-uk/2013-half-year-britain-best-selling-car-brands-and-models/

It's really BMW that's flooding the British market with little cars: BMW sold 22,437 little BMW 1-Series cars in Britain in the first seven months of this year, making it one of Britain's top ten selling car models along with the Ford Fiesta, Ford Focus, Opel Astra, VW Golf, Opel Corsa, Nissan Qashqai, VW Polo and Nissan Juke.
On the other hand, the Audi A1, A3 and A4 were not on among the top ten best selling cars in Britain, even though Audi as a brand sold more cars than BMW in Britain.

Greenmachine, notice how Gnut skillfully avoids discussing the 120K unit a year sub-premium A1 which has a starting price cheaper than a Mini..and only 2K above the polo!

Gnut ... the ONLY reason Audi is more profitable is due to sharing engine, technology and platforms with Volkswagen. End of story. Audi would not be able to survive on its own as the costs would have killed it years ago. You mention the 3-series accounting for 30% of the sales, yet you forgot to mention that the 3-series is more expensive than the A4, C-class, Lexus IS, Infiniti G-series and cadillas ats ... Actually it is very impressive to be able to sell as many of those cars, remain very profitable and not dilute the brand so much as bringing in cars that start below 20k as in the A1 & soon to be released Q1.

Hey, just bringing up the UK market as an example on how Audi's A1 boosts its sales. That's all.

You're right. I'm not familiar with Audi's sales breakdown globally. But apparently neither are you.

Looking at Audi's 2013 Q1 report:
A4/5 accounted for 31% of its global sales. A1's sales - 8.3%. A3 - 13%. That's 52%, those segments combined, of total global Audi sales in Q1 '13.
vs. BMW's 2013 Q1 report:
3 series - 28.7% of global sales. 1 series - 14.1%. Or a combined 42.8%.

So, despite the fact that the A1 isn't sold globally, it will probably still increase Audi's global sales by some 130,000 units by the end of this year. That's 130,000 more whatever Audi models it would have had to sell, if the A1 hasn't existed. Plus think about it - it's just an upholstered Polo for crying out loud.

I'm sure BMW isn't worried since it does sell a direct competitor to the A1, the successful Mini Cooper. Besides, who's been continuously throwing German car sale numbers, month after month, like some obsessive fanboy? Clearly not me. So keep it up. Keep feeling the need to protect yourself with these numbers like a shield.

Oh, and forgot to add, wasn't the gap between Audi and BMW around 10% or 110,000 units 4-5 years ago?

And also, help me out here: BMW's YTD increase is... what, 8.4%? Audi's is what... 6.9%? Yeah I see, Audi is definitely catching up!

And then, let's see: 130,000 units of A1 will probably sell this year, and the current gap is 20,000+ units. It would appear that it would've been a 150,000 gap had A1 not existed today.

Just saying - not sure it can get any clearer what Audi's trying to pull here.

GreenMachine, not sure you realize the reason BMW isn't going downmarket into A1 and A3 territory is not because it doesn't want to for the sake of its brand image. BMW isn't going downmarket because it would get killed on its profit margins if it did.

BMW is losing the chance to get into the highly lucrative compact market because it wouldn't make enough money on the smaller cars to make it worthwhile. Audi, however, doesn't have the higher cost burden that BMW does and therefore can afford to go downmarket.

If BMW had the cost advantages Audi enjoyed it would go downmarket. Just look at Mercedes-Benz as a prime example. Mercedes-Benz CEO Dieter Zetche realized the only way for Mercedes-Benz to remain competitive against BMW and Audi would be to go downmarket with the A-class B-class and CLA-class.

Mercedes-Benz outsells BMW by a wide margin when it comes to high-end, luxurious, $75,000+ cars sold globally per annum. The success of the SL, CL, G and most evidently S-class models demonstrates this. Mercedes-Benz couldn't stay competitive relying on just its high-end, expensive coupes and sedans. It needed to go downmarket and it did.

Sure, the brand image might take a hit when someone in a CL63AMG sees someone in an entry level CLA class, but at the end of the day its a business decision. Look at Mercedes-Benz's profit margin fall down a cliff due to the release of its new compact models, but Mercedes-Benz was wiling to take a hit to its brand image and profit margin if it meant giving the brand another chance to remain competitive without having to merge or get acquired.

You might view Audi's downmarket strategy as non-luxury. CEOs of Audi's competitor companies I'm sure see the decision as one that was able to be made due to Audi's cost savings. BMW realizes that it can't compete in the lower price range without killing its margins and also realizes that by not going downmarket it will likely cede the global sales crown.

" BMW isn't going downmarket because it would get killed on its profit margins if it did.

BMW is losing the chance to get into the highly lucrative compact market because it wouldn't make enough money on the smaller cars to make it worthwhile. "

Wait what?? BMW makes Mini, so it would be advantageous for BMW to implement Mini platforms into lower model BMWs to spread out development costs for the Mini brand....which would increase profit for BMW. BMW is in fact planning to do this, BUT the FWD BMWs which will share components with Mini will be more premium and price above Mini, and be part of the 1 series family which competes with the Audi A3. The A1 is priced below Mini, and is sub premium.

It's a bad decision for BMW to incorporate its FWD MINI-based vehicle into the 1-series family and price it accordingly. BMW should price it lower, otherwise it will likely lose customers to the A1.

Price is not the sole determinant of "premium".

caznable55 proves this by offering some very compelling data. For example, Audi passed the $45,000 average transaction price that analysts define as the metric used to define a Tier 1 brand in 2010.

Audi has the lowest average age among all luxury brands by a year below BMW, but the highest percentage of customers that have a college degree by 3% over BMW. Additionally, Audi customers have the highest median household income by $9,000 over BMW and the lowest percentage of vehicles that are leased by more than 20% over BMW.

Audi CEO, Rupert Stadler, has stated that "premium" for Audi is not defined by length, width or price. Stadler said, "For us, premium doesn’t mean overall length and width. Premium depends on the
use of high-grade materials, quality workmanship, emotion-packed design and innovative technologies. Wait until you get to know the A1, the first premium car in its segment. I am sure that it will convince you in every respect."

http://microsites.audi.com/a1_presse_assets/pdf/100301_A1_Fragen_Antworten_Stadler_eng.pdf

At the end of the day its a business decision for Audi to move downmarket. In terms of sales volume and profitability, this decision will prove to be a very good one. Critics may attack the "premium" label Audi is placing on the A1 due to dimensions and/or price, but in the end it comes down to increasing sales and profitability. Audi knows this and is moving accordingly. BMW realizes this too but is concerned about being criticized over the "premium" moniker it would attach to such a vehicle and diluting its brand image. BMW's decision will have implications, one of which will be that it will cede its position as world's best selling premium brand to Audi.

There is a reason why Stadler gets paid over $10 million per year to make decisions such as these and rants about how price should be the defining measure of "premium" will not stop him nor Audi from making more decisions in the future that increase revenue and profitability, whether people like it or not.

????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Actually.... I work in the Automotive industry and the defining metric that analysts use to qualify a Marque as a Tier 1 is brand a an average transaction price of $45,000 or higher. Audi crossed that threshold back in 2010 and is currently averaging around $53,200 per copy as of 2nd quarter 2013- still lower than than the average sale price on a BMW or Mercedes by about $4,000, but around $5,000 higher then Lexus.

Some other interesting Audi statistics:

Median age is the lowest among all Luxury brands at 48 years, with BMW 49, MB 54 and Lexus 62
Percentage of customers that are college graduates is the highest at 84% vs BMW 81%, MB 77% and Lexus at 73%
Household Median income is the highest at $192,000 vs. $183,000 for both BMW and Mercedes and $141,000 for Lexus.
Percentage of Audis being leased vs those that are purchased has been trending lower from 53% in 2007 down to 40% in 2013. All three competitors have a lease penetration of more than 60%.

Just some interesting food for thought...

So even though Audi fanboys have been calling audi tier 1 long before 2010, they've finally finally been validated?! Audi owners rejoice!! Brings a tear or two to your eyes doesn't it.

But then in markets where the A1 is sold is probably still tier 2 then? Cool!

I was wondering why Audi NA doesn't bring the A1 here. Afterall, North America is such a big market. I guess audi is worried they'll just fall down to tier 2 again.

So all the rich guys lease their cars then. That's pretty interesting. That's something I actually didn't know before.

Actually, yes rich people do lease cars more often as they tend to switch vehicles frequently, but the higher percentage of leases is in this case is due to the fact that leases are much more affordable on payment than financing or a cash purchase for the average customer. Basically it's the syndrome of people that can barely afford the $299 lease payment on a stripped down, bare bones luxury car and have to live off of top ramen as their regular meals in order to be seen in a status car, hence the lower median income and percentage of college graduated for the 3 other tier one brands ;) basically many people by a MB or BMW to show off to others, while historically Audi customers buy an Audi simply themselves...

downmarketing and dilution is the same thing. obviously audi doesn't worry about diluting its brand. the brand has been pretty dilute since day 1, when they rebadged vw's and then charged more. :p. since audi sells a1's in many countries, a1's that compete with lesser brands, why wouldn't they still be 2nd tiered? if they crossed the threshold in 2010 in the us, that must have meant a lot of entry a3/4 before that...

Audi doesn't worry about diluting its brand because it cares more about increasing its revenue, profit and margins, which is something BMW should also do instead of being so worried about its "brand image" importance. If BMW doesn't go downmarket, which it doesn't appear willing to do for the sake of protecting its brand image, it will lose in the sales, profit and profit margin arenas.

At the end of the day, its a business decision made by Audi to introduce a premium compact car. You may think "premium" is defined by length, width, price, sharing components with other "less premium" brands or less prestigious competitors who compete in the same price range. Audi, however, does not share this view. For Audi, "premium" is defined by the
use of high-grade materials, quality workmanship, emotion-packed design and innovative technologies.

By sacrificing a bit of its brand image, Audi will overthrow BMW as the world's best selling premium brand all while achieving a higher overall profit along with a larger profit margin.



Audi would not be second-tiered in countries where it sells A1s because the brand is not one car. Although average transaction price is $5,000 lower, Audi customers are younger, more educated, have higher household incomes and are at least 20% less likely to lease their cars than their BMW counterparts.

GreenMachine, if that sounds like second-tier to you, I suggest you get your head checked :)

in markets where the a1 is prevalent, for example the uk, 40% of audi's sold are a1/3.

so, you're right, audi isn't just one car. it's two. one of which starts at a mere 13,700 pounds. that's cheaper than a camry, a golf, or the priciest scion.

good luck crossing whatever industrial threshold it needs to become first tiered in the uk, or anywhere the a1 is sold!

Considering Audi passed the $45,000 average transaction price to qualify as a luxury brand, I don't see how you can make the argument that in certain markets Audi is considered a second-tier brand while in others it is considered a first-tier brand.

Using that comparison, I can say BMW is a second tier brand in China and Europe because it sells fewer vehicles than Audi.

You're not getting anywhere with your argument.

why not? they set a defining price threshold here. why can't they set one in the uk for say 30000 pounds as the threshold for luxury brands? or 35000 pounds even?

there's a reason why the industry set a cut-off. to differentiate between a hyundai and a bmw. clearly they didn't want audi or toyota or whoever to make the cut-off by setting it too low, many years ago. the price threshold is obviously important and serves a purpose for the car industry. otherwise, why bother. cuz they're bored?

if the threshold is 35000 pounds, and a significant amount of audi's sold are a1 and a3's (base at 13,700 and 18,300), yeah that's trouble for audi uk.

BMW has a second-tier customer base when compared to Audi because a fewer percentage of BMW customers have college degrees, they have a lower median household income and therefore a greater percent lease their vehicles instead of buying in cash or financing.

BMW owners must scrap every last penny they can in order to afford their stripped down $299 per month 328i with zero options.

"BMW has a second-tier customer base when compared to Audi because a fewer percentage of BMW customers have college degrees, they have a lower median household income and therefore a greater percent lease their vehicles instead of buying in cash or financing. "

Lol. Income, education, and lease penetration are all within a few percent for all the manufactures. To make such bold statements such as one is more premium than the others based off it is unwarranted. Especially since most of this data is outdated from 2009/2010.....before Audi started selling A1 like cars. Have a more recent sources??

"All three competitors have a lease penetration of more than 60%." Have a source b/c his looks like BMW lease penetration rate from a few years ago 2008-2010 when lease rates peaked due to the recession, and in the last few years the rate has gone down in the us to around 45%.

Had no idea I was adding that much fuel to the fire with those industry stats! Actually these were current as if June 25tg of this year.

It's great that you brought up-to-date industry data to these discussions. Disregard the irrational responses to your posts (such as being voted down for posting rational information). The more negative votes you get here is a good thing: it just shows that your data is compelling and resonates in people who cannot rebut such information.

Your data partly explains why 16 (59%) of Audi USA's 27 models start from over $50,000. Of the remaining 11 models starting below $50,000, the majority of these Audis bought are probably bought at selling prices above $50,000 once options are added. If Audi customers could not afford these cars, then Audi USA would have a product lineup probably leaning towards more cheaper models below $50,000.
http://www.audiusa.com/models

"it just shows that your data is compelling and resonates in people who cannot rebut such information."

Yes believe the "compelling" information for which no current source has yet to be provided...