Tony Van Alphen
Business Reporter
Franz Jung wants to steer BMW Group Canada back in front of the luxury car pack but insists he won’t spend money like last year to do it.
Perennial leader BMW has slipped into second place behind Mercedes-Benz Canada in the premium auto segment but Jung, the automaker’s president and chief executive officer, said Wednesday he believes his company is still within striking distance of passing its German-based archrival - without the cost.
After leading the luxury car market for most of the last decade but barely topping it in 2009, BMW is behind Mercedes-Benz by about 1,100 vehicles in sales during the first eight months this year.
Jung said that’s about the size of the gap BMW found itself at the same time last year before a late surge with some incentive fuel pushed the company back on top.
“We will spend way less than last year, “Jung told reporters at the company’s new headquarters in Richmond Hill. “I can guarantee you we will not spend $10 million to sell the last 500 vehicles in the market”.
“We think we still have a chance to overtake them (Mercedes-Benz) with a product line that is older than our competition.”
Although Jung said BMW would be satisfied holding either the No.1 or No.2 positions, he stressed that top spot is important to customers and the company in the luxury car segment.
“…No. 1 is the position you want to be in because our customers particularly in the premium segment want to buy success,” he said at a media briefing. “And they define success with your ranking in the premium segment.”
Meanwhile, the parent German company said this week it is aiming to increase worldwide sales of BMW and the Mini brand by 55 per cent through new models and entry into other segments during the next decade.
Over at rival Mercedes-Benz Canada, president and chief executive officer Marcus Breitschwerdt downplayed any race for luxury auto supremacy here despite closing the gap in recent years and now leading BMW.
“If volume and size would be the most important things in the world, then General Motors would be the best company,” he said in an interview. “Obviously they are not. They went bankrupt.”
He added if Mercedes had a sales “target” to make sure it could be the segment leader this year, it would simply discount models by thousands of dollars.
“With all due respect, it (being No.1) is not something, I look at,” he added.
Breitschwerdt noted the market for luxury cars in Canada will continue to grow because customers have been moving from quantity to quality over several years with the emergence of mainstream offshore-based automakers from Japan and Europe.
“Hard working middle class Canadians are now looking for more than quantity,” he said. “Now it’s about quality. This Canadian awareness is growing.”
The luxury auto segment in Canada where prices can range from $30,000 to more than $100,000 has grown steadily over several years with brands such as Acura, Lexus, Audi, BMW and Mercedes posting big increases.
Despite the toughest economic conditions in decades, sales at Mercedes-Benz, excluding the Smart brand, shot up almost 20 per cent to a company record of about 24,300 in 2009. Volumes at BMW excluding the Mini brand climbed 6.4 per cent to 24,724 last year, also a record.
In the first eight months of this year, Mercedes sales have risen another 16 per cent to 18,488 while BMW’s volumes have improved 8.3 per cent to about 17,300.
