BMW has been knocked off its perch as best luxury car

BMW lost its crown as the world’s biggest luxury-car brand to Mercedes-Benz, ending its reign after more than a decade amid a cluttered lineup of aging models.

The Munich-based manufacturer sold 80,000 fewer cars last year than the Daimler AG brand, which drew younger buyers with sporty redesigns and a bigger array of increasingly popular SUVs. A rebound for BMW will be hampered by challenges that range from slowing auto demand in Europe to the threat of trade barriers in the U.K. and North America.

BMW’s global deliveries rose 5.2 percent in 2016 to 2 million cars, growing at less than half the 11.3 percent rate which lifted deliveries at Mercedes to 2.08 million. Third-placed peer Audi sold 1.87 million cars in 2016, 3.8 percent more than a year earlier. Mercedes had lagged behind the BMW AG marque since 2005 and temporarily dropped below Audi to third place before a revamped SUV lineup drove a strong comeback in recent years.

Sales will expand in the low single digits in 2017, BMW’s sales chief Ian Robertson said at the Detroit auto show on Monday. Headwinds this year include weaker demand in the U.K. amid preparations for Brexit, and slowing growth in China, he said.

While BMW Chief Executive Officer Harald Krueger says he’s more focused on profitability than on sales, he needs funds to cover rising investments in electric cars and self-driving features.

All three German luxury-car makers face that challenge -- along with increased competition from expansions by smaller rivals such Jaguar, Volvo and Alfa Romeo, and from new entrants such as Tesla Motors Inc. BMW is particularly vulnerable because it doesn’t have the deep pockets of a large parent to fall back on.

Climbing research and development spending has pushed BMW profitability lower, with the ongoing revamp of its lineup also weighing on its earnings.

Read more at Bloomberg.

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