BMW Versus Mercedes-Benz: Strong Rivals Headed To An Uncertain Future

If there is a healthy rivalry spanning the depths of automotive history, it is that between Mercedes-Benz and BMW. It’s impossible to speak of one house without mentioning the other. They are eternal rivals like Renault and Peugeot in France, Ferrari and Lamborghini in Italy, Ford and Chevrolet in the United States, or Toyota and Honda in Japan.

This friendly competition has resulted in notable progress in terms of performance, safety, and design within the motoring industry. Mercedes is probably the best motivation to keep BMW hopping, and vice versa. Without this strong competition, the two German manufacturers would have found themselves in a more difficult situation, never mind holding station at the top of the premium car market. Competition is always a good thing.

Today, BMW and Mercedes-Benz are the most popular premium car brands in the world. Many motorists aspire to own something from these companies, and it shows in the sales stats. Combined, they sold nearly 4.3 million vehicles in 2021, accounting for 40 percent of global premium and luxury vehicle sales.

BMW Is Growing Faster

While the two manufacturers have traditionally been very similar when it comes to technology and innovation, changes in that trend are starting to emerge. For example, last year, BMW overtook Mercedes and became the world’s favorite premium car brand, thanks to a 9 percent increase over 2020 volumes. In contrast, Mercedes-Benz (excluding Smart  and vans), recorded a drop of 5 percent.

BMW has benefited from a growing demand for its most popular models, while the Stuttgart marque has suffered from the aging C-Class and E-Class. BMW increased its sales by volume in China, Europe, the United States, and Japan-Korea, while Mercedes recorded declines in these four markets. The difference in the variation in sales for China and North America is significant, respectively up 8 percent and 21 percent versus a drop of 3 percent and 1 percent.

Aggressive Versus Conservative

Last year’s results are partly explained by the different strategies adopted by both companies. Over the past decade, Mercedes has focused all its efforts on reducing the average age of its customer base. The introduction of the A-Class, CLA, CLS and the SUV range with coupe-derived versions are the result of this change. It seems these are choices that paid off, as today Mercedes is known not only for its luxurious, elegant sedans, but also for its sportier performance vehicles.

BMW never had that problem. In contrast to the historical positioning of its rival, Bimmers have increasingly been associated with performance in the premium segment. That is why there have been few changes in strategy in recent years. Until now.

Based on the latest data, it appears BMW is now taking a more aggressive approach while Mercedes still treads the conservative path. Here are some clear examples of this emerging difference: the BMW iX, the second generation of the 4 Series, and the recently updated BMW 7 Series recently. They were like atomic bombs in social media, generating all kinds of talk for better or worse. Meanwhile, we have seen how the latest Mercedes models follow the concept of evolution versus revolution.

We have yet to understand whether the change in approach will pay off for BMW or Mercedes, and what will happen with the global sales gap. This may be a key differentiator in the future, or it could simply be another cycle for each of the two houses.

The author of the article, Felipe Munoz, is JATO Dynamics Automotive Industry Specialist.

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