The primarily competitors in the luxury segment are all on a sales rampage. Audi, BMW and Mercedes-Benz have posted record sales in 2011. BMW took the top spot in the United States and globally. Growth at Mercedes-Benz has trailed both Audi and BMW though.
Sales and profits are still on the increase, just not as rapidly. The business is thriving, but Mercedes isn’t content to leave it at that – they want to be on top in the global sales race. Audi wants to achieve this goal too. At this juncture, Audi looks like they have a better chance of succeeding in that pursuit.
Chief Executive Officer Dieter Zetsche recently wrote a letter to employees about this, saying: “We can’t be content to be in a solid second or even third place. We are Daimler – we should be far ahead of the pack…..if it requires something we don’t have, we’ll identify and develop it…some of our competitors are now growing faster and more profitably than we are. Granted, those are just snapshots in time and should not be overestimated. After all, many of our best new products are yet to come.”
Some of those products he is referring to are apparently the new small front-wheel drive platform that will include the A- and B-Class as well as a new four-door sedan. German magazine Manager Magzin states that Zetsche plans to increase Mercedes sales to 2.7 million units by 2020, with profit margins reaching 10 percent. These are all ambitious goals to be sure. What’s more is 2.7 million sales doesn’t sound all that “premium” to us!
Increasing sales by these margins is going to require added production. The approach to doing that is two-pronged. Daimler is spending over $2 billion on an upgrade of its Tuscaloosa, Alabama plant. There Mercedes produces the M-Class, but it is expanding to include the C-Class and next-generation R and GL-Class SUVs.
The big news though is yet another factory, located in the United States or Mexico. The plant would produce the next-generation of the A-Class and front-wheel drive cars, coming online in 2017 or 2018.