Last year, 2.03 million cars were sold in the UK and the German big three — Audi, BMW and Mercedes — took a healthy 17 per cent of the market. What’s more, those 342,000 cars were virtually all sold at premium prices and with a healthy profit margin.
The rise and rise of premium brands has been one of the biggest stories in the UK new car market. While volumes and margins have been crumbling for the mass-market brands, the premium badges have made steady strides over the past two decades.
BMW, the best established of the three back in 1992, has more than trebled its volumes, from 40,000 units per year to 127,000 units. Mercedes has added about 69,000 units, a four-fold rise on its 1992 sales.
Audi, by contrast, has increased its volumes nearly nine-fold. The UK sales of the Volkswagen Group’s star performer have jumped from just 14,000 units in 1992 to 123,000 last year.
There’s no doubt that the UK has become a much more brand-orientated consumer market since the turn of the century. BMW sales grew steadily from 40,000 in 1992 to 67,600 in 2000, but by 2001, its sales had jumped to 81,000 in a single year.
This event is particularly fascinating because BMW had broken up and sold off the Rover Group in 2000, a seismic event in UK politics that dominated newspaper front pages for weeks. BMW was so worried by the potential backlash from UK buyers that it engaged market researchers to monitor the impact on its brand. Clearly, the company need not have bothered.
BMW’s and Audi’s figures also show the effect of the economic growth in the early 2000s, which was powered by an economy boosted by low interest rates and a housing boom. Between 2001 and 2008, Audi’s sales leapt from 43,600 to 100,845 units, while BMW’s jumped from 67,676 in 2000 to 121,575 in 2007.
What’s really remarkable is the resilience of the demand for Audi and BMW. Even in the middle of the credit crunch, BMW sales only dropped to 98,683 units (higher than in 2003), and then sprang sharply back into triple digits.
Audi’s performance was almost identical. It dipped from 100,845 (only a single sale lower than in 2007) to 91,172 units in 2009, which was still higher than in 2006. Audi was only a fraction short of three figures by the end of 2010.
All of this not only illustrates how premium brands managed to ride out a serious recession, but it also shows that a policy of massively diversifying the range of available models pays dividends when trying to retain existing customers