The most intense automotive rivalry in Europe is entering a new phase: Mercedes-Benz and BMW will be testing the world's appetite for small cars with big prices. Since BMW dumped Rover and Mercedes shed its relationship with Chrysler, both automakers have shunned high-volume segments of the car business and focused on premium models. Now that pressure is growing for better fuel economy, and there are fewer top-shelf segments to exploit, both are looking for additional growth opportunities. Onrushing BMW is chipping away at Mercedes' share of the premium market. According to IHS Automotive, M-B now commands 21.4%, down from 25% in 2001. BMW used to promise sales of two million vehicles by 2020 but is running so hot that it moved the target date sooner to 2016, and its 3-series is the top-selling luxury car in the world. Mercedes chief Dieter Zetsche has vowed Mercedes will more than double sales by 2020 and pass BMW, but analysts are -- to put it politely -- skeptical.
Little things count. European auto journalists polled by Bernstein Research complained about Mercedes' confusing nomenclature. How many people outside a Mercedes dealership know the different between an SL, SLK, SLR, and SLS? At BMW, the ranking is clear: the higher the number -- 1, 3, 5, 7 -- the higher the price. And BMW's dual-kidney grille is used uniformly across the product line, whereas the M-B three-pointed star moves from the hood to the grille and comes in two or more sizes.
So, in conclusion, BMW has a faster engine, younger people buy it, whereas old people buy Mercedes. BMW will produce 2 million cars in 2016, which will overcome Mercedes sales.