SUCCESS used to come easily for BMW, whose sporty sedans in three sizes would be snapped up by affluent consumers.
But the premium auto business has now become more complicated, as illustrated by the BMW models displayed at the Los Angeles Auto Show (ongoing until Dec. 10), amid a backdrop of heavy spending by luxury car brands on new models and technology as they make awkward leaps from a predictable past to an uncertain future.
On one side of BMW’s display stands a prototype of the X7, a vehicle that was unthinkable in the brand’s lineup a few years ago when the top-of-the-line model was still defined as a large sedan. On the other side, BMW displayed the i Vision, a prototype of an electric sedan that will rival Silicon Valley electric luxury car maker Tesla, Inc.’s Model S when the production version launches in 2021.
“This is the future,” said Bernhard Kuhnt, the new head of BMW’s North American operations, referring to the i Vision Dynamics and electric vehicles in general.
More immediately, Mr. Kuhnt said, the X7 represents BMW’s determination to offer more SUVs, which now account for more than half of luxury vehicle sales in the US, to reverse a 4% slide in sales this year through October.
“In October, we sold 60% sedans in a market that is 55% SUVs,” he said.
But next year, as BMW’s US dealers get more newly redesigned X3s and the new X2, the SUV-to-sedan ratio will start to flip, and sales should grow, Mr. Kuhnt said.
BMW’s rivals are at different points in their own jumps from the strategies that fueled growth during the past two decades. The type of vehicle that defines the top end for German luxury brands shows how the business is changing.
“The classic definition of the standard bearer as a three-box sedan — that is migrating in three directions,” said Scott Keogh, head of Audi’s US operations. One direction, he said, is “electrification as the new prestige,” a trend driven by Tesla.
Rivals at other established luxury brands agreed during interviews at the LA show that some form of electric power — fully electric or plug-in hybrids — is now necessary in order to compete.
“The US is a market where customers are asking for electric vehicles,” Hakan Samuelsson, chief executive of Volvo Cars, said in an interview on the sidelines of the LA auto show. “That’s a premium value — to be carbon free.”
Volvo has said it will engineer all its vehicles to rely on full or partial electric power starting in 2019.
Another way the market is veering away from sedans is with the rise of the large luxury SUVs, now available in most premium brands at prices that can easily top $100,000. Jaguar Land Rover, owned by India’s Tata Motors Ltd, is displaying a $207,900, 557hp Range Rover at the LA show. Audi plans to launch a Q8 SUV next year that will add a more luxurious SUV to the top of its US lineup, Keogh said. Two large luxury SUVs are now sold for each large luxury sedan, Audi reckoned.
Mercedes-Benz brand used the Los Angeles show to debut an example of a third trend. The new generation of the Mercedes CLS coupe joins the Audi A7 and the Porsche Panamera in a stable of large, premium, sporty fastbacks. Not to be outdone, BMW is displaying a large, sleek coupe of its own, the 8 Series. — Reuters