Feature: Audi, Mercedes upgrade dealer networks as Canadian luxury sales grow auto articles auto brands
Feature: Audi, Mercedes upgrade dealer networks as Canadian luxury sales grow auto articles auto brands
Feature: Audi, Mercedes upgrade dealer networks as Canadian luxury sales grow auto articles auto brands
2011 Audi A8 (top); 2011 BMW 5 Series; 2011 Mercedes-Benz E-Class. Click image to enlarge

By Steve Mertl

A surprising shift in Canadians’ automobile buying habits has top importers pumping money into their dealer networks. Mercedes-Benz Canada has just announced it’s spending $40 million to relocate and greatly expand its flagship downtown Vancouver store. The move comes after rival Audi revealed plans to add two Vancouver dealerships in a bid to become the No. 1 luxury nameplate in Canada.

The impetus behind this push is the steady expansion of the luxury car segment’s share of the Canadian market in the last decade.

Figures compiled by DesRosiers Automotive Research reveal luxury sales accounted for 5.6 per cent of the market in 2000, roughly 87,000 vehicles out of total sales of about 1.55 million. By 2010, luxury sales grew to almost 147,000 and made up 9.4 per cent of the 1.56-million sales total for last year.

It’s not a one-time spike. Luxury sales grew steadily over the last decade in total volume and share of the overall market, hardly breaking stride when the global financial collapse shivered the Canadian economy in 2008.

“Canada has a structural potential which is by far higher than many of my colleagues would have imagined years ago,” says Marcus Breitschwerdt, president of Mercedes-Benz Canada.

Mercedes, BMW and Audi together have about five per cent of the Canadian market, he says. “In comparable markets we have 10 to 15 per cent market share,” he says. “Canada is by far more a European and Asian market than an American market.”

Breitschwerdt credits Japanese automakers with giving Canadians a taste for high-quality, well-engineered vehicles, helping the Detroit Three’s market share shrink steadily.

“But at a certain point you want to step up,” he says. “You need more sophistication, innovation, more brand quality. This is where we come into the picture.”

Mercedes was the top luxury brand in Canada last year, with 28,062 sales, according to DesRosiers’ numbers. BMW was No. 2, with 27,202, followed by Acura at around 15,276, then Audi at 14,333. Lexus is fifth with 14,249, a drop of nearly 10 per cent due perhaps to Toyota’s recall troubles and, says Breitschwerdt, gaps in its product line.

Audi covets the top spot. “We have a corporate vision to become the No. 1 leading luxury brand worldwide,” says Martin Sander, president of Audi Canada.

“I think the cars we’ve launched in the last couple of years were really the most important ingredients of our success,” he says, adding the Volkswagen subsidiary’s goal is 16,000 sales in 2011.

BMW Canada had a record sales year in 2010 and expects this year to be equally good, says communications director Barb Pitblado. She agrees the Canadian luxury segment is primed for growth and BMW plans to add to its 40 dealerships (it also has 25 Mini stores). With the second-generation X3 and the upcoming X1, Pitblado says the company is well positioned with products in the burgeoning luxury SUV segment.

“That’s the category that’s really exploding,” she says.

Audi, with 41 Canadian outlets, is expanding its dealer presence in Metro Vancouver to five stores, the same as Mercedes has in the city.

The Dilawri Group, with 36 dealerships nationwide, including Porsche, Bentley, Aston-Martin and Land Rover stores in Vancouver, will build a $17-million Audi store near its other luxury outlets. With an 18-car, two-level showroom and 17-bay service facility, it will be equal in size to Audi’s largest Canadian dealership in Montreal. The Gold Key Group, which owns two Vancouver-area VW stores, will build a $10-million Audi outlet in suburban Surrey. Both new stores are scheduled to open in 2012.

Mercedes’ new flagship Vancouver store, sited on former industrial land on the east side, will sprawl over 165,000 square feet and includes boast a 19 service bays. No opening date has been given but it will replace Mercedes’ 35-year-old store on the downtown fringe. It will be owned directly by Mercedes, as are 14 of its Canadian retail outlets, including all the Vancouver stores.

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