by Jez Spinks

BMW believes the increasing number of affordable compact luxury cars has the potential to double sales in Australia’s premium car segment.

The German car maker’s local boss, Phil Horton, says the premium market is already growing more rapidly than the overall market – up 14 per cent year to date compared with three per cent for all passenger cars and SUVs.

Horton says luxury cars have never been more affordable in Australia, though he also believes Mercedes has been unnecessarily aggressive with the positioning of its smallest car, the A-Class hatch [read our separate story].

“The premium segment in Australia year to date accounts for 8.4 per cent of total market. That’s quite low for a mature market like Australia,” says Horton.

BMW Concept Active Tourer dash lores

“I think there is opportunity to go up by another 50 per cent to 12 per cent… even 15 per cent over a period of time.

“More premium cars are coming in at the lower end.

“It’s no secret [we are building a] car to compete with the B-Class (Mercedes’ higher-riding version of the A-Class, pictured below). We’re going front-wheel drive. Introducing smaller engines.”

BMW’s B-Class rival is expected to be called the 1 Series Gran Turismo and based on the BMW Active Tourer Concept (main image and interior shot).

Mercedes-Benz B200 CDI driving

It’s one of about 20 new compact front-wheel-drive models that will emerge from the BMW Group in coming years, including the next-generation Mini that goes on sale in 2014.

Mercedes-Benz has already hit the ground running with a range of downsized models based on a new modular platform called MFA.

The A-Class and B-Class sit on the architecture, as does the CLA four-door ‘coupe’ (due locally later this year) and the GLA crossover (due second quarter 2014).

BMW 1 Series hatch

The GLA, though, is one model where Mercedes is playing catch-up to its German rivals, belatedly coming to compete with the Audi Q3 and BMW X1.

Mercedes is also considering models even smaller than the A-Class for the future.


  • Popper

    ” The premium segment in Australia year to date accounts for 8.4 per cent of total market. That’s quite low for a mature market like Australia,” says Horton. ”

    That’s because their car are overpriced, i.e., relative to the pricing of other cars. We see different relative pricing in other markets. He thinks the way forward is to introduce low-end premium models that are no longer premium models.

    • Name

      You could slap a BMW badge on a Tata and some people would still think there premium cars

      • al

        Look, they won’t last longer, but they are prestige. And plenty of people in Europe can afford them. It really just depends how much money you have loose to play with. If you don’t have the coin, don’t be jealous.

      • asjas

        But after getting burnt once or twice, people will stop going back.

  • Jacob

    Yes it can if BMW stop ripping Aussies off.

    • al

      It’s the Aussie government ripping you off with import taxes, not BMW. Lack of insight…

      • $29896495

        It’s not and this comment plus the VW one you made shows you aren’t from here.

        • hsdf

          al’s taking criticism of his home country’s auto makers a bit too personally methinks.

          • $29896495

            Think you’re right

      • Bob

        5% import taxes (applied to ALL cars) means that BMWs need to cost 100% more than they do in the US?
        Methinks you are are a car dealer to be making comments like that.

    • JamesB

      Australia should take Holden out of life support once and for all. By then, we can probably enjoy properly made cars without having to pay a sizeable heft.

  • EasyRider

    Well done Mercedes for showing the example to the other European premium manufacturers that buying safe cars should not cost consumer arms and legs. A, B, CLA and soon GLA are the perfect examples.

  • $29896495

    I’m surprised this guy actually has a job. MOD, over price your cars, then complain that people are waking up to it and the overseas price differential. Then strip equipment relative to other cars and increase pricing. Then complain some more because people don’t want to get ripped off and don’t buy the cars. Wake up! Price your cars relative to the level they sit at in the market like you do in other countries. Pull back on the Options rip offs. You might actually make some giant inroads in sales. Remember lots of moderate profits equal one large profit. A few over priced profits equals a small profit.

  • Autoholic

    BMWs in Germany are considered as a mostly affordable semi premium to luxury brand (depending on model) and are priced accordingly. Here the price is higher because they are sold as premium to luxury and therefore attain a higher price tag. Also, the fact that many more BMWs sold in Germany than here lowers the price.

    • F1orce

      Germans must all be very rich, seeing as how BMW, Mercedes & Audi are all major brands that sell..

      • al

        Or in other words: You Aussies are not as rich as your media + your politicians always tell you…

      • Autoholic

        Not really, in Germany people expect products to be of high quality. Their incomes are quite high compared to ours, hence their products are usually more expensive than ours.

      • bd

        A lot of BMWs, Mercedes and Audis, esp. midsize and up are sold as corporate vehicles and Europeans buy a lot of the smaller, stripped down (small engine, no leather, etc.) models.

        The previous Mercedes A and B Classes were in no way premium vehicles.

      • kdj

        Yea, not many Germans drive around in a 1999 Toyota Camry.

        • F1orce

          It’s better than your W203 C-class

        • Autoholic

          They would drive a 1999 318i instead.

  • Sumpguard

    So this is the same Phil Horton that is attacking MB for lowering prices to grow the market ? The same guy that is suggesting MB should collude to keep prices high? Does this guy have a split personality?

  • Michael

    Buying a BMW, Audi or Mercedes in Australia is stupid. We are paying almost double the price to other countries, but we don’t earn double the wages. It just doesn’t make financial sense!

    • Popper

      It’s interesting. In the UK, the new Golf GTI with 5 doors, DSG, and performance pack is about 28,000 pounds—and, remarkably, the entry BMW M135i is about 30,000 pounds. That is, there’s a price difference of about 3,500 Aussie dollars between the two over there. Here things are different.

    • Jacob

      Even if we earned double the wages, the cars are not made here, so why should we pay way more than the Brits?

      Some Japanese cars are sold here for under $20k!

  • JamesB

    It’s unlikely to happen if we have to pay 335i money for just a 316i, which makes less than half the power. Ridiculous!