German luxury brands should rethink strategy as sales peak, analyst warns – Automotive News

In the first quarter, BMW Group reported its first loss in a decade in the main automotive division after booking a €1.4 billion ($1.6 billion) provision for potential European Union fines over collusion. Even excluding this charge, the unit’s return on sales dropped to its lowest point in 10 years.

Mercedes increased sales last year 0.9 percent to 2.3 million vehicles globally to claim the No. 1 premium spot for a third straight year. BMW sales grew 1.8 percent to 2.1 million, while Audi sales fell 3.5 percent to 1.8 million.

Behind the top three from Germany, the U.K.-based Jaguar Land Rover’s sales slipped 4.6 percent to 592,708 in 2018 as the brand struggled in China. Jaguar Land Rover suffered a £3.6 billion ($4.5 billion) loss for the full financial year ending in March.

Houchois said he was “neutral” on all three German automakers, meaning he doesn’t recommend investors buy shares. It was unusual, he said, for the New York financial services company not to recommend a “buy” on any of the three.

Premium automakers need to rethink their strategy, Houchois said. “If I’m right [that] premium demand has reached a peak, then there must be a reinvention of the premium business model,” he said.

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