BMW 3 Series under threat

New entrants in the mid-size prestige passenger car segment will expose established entrants – like BMW's 3 Series – to unprecedented competition.

The 205-series Mercedes C-Class is performing very strongly in the market. As yet, the Benz doesn't seem to have pulled too many customers away from BMW directly, but for the first three months of this year the C-Class has sold 2583 units – versus 919 for 3 Series and 70 for the 3 Series GT. 

For the full year in 2014, the sales chase was much closer: 4588 for the 3 Series and 5845 for the C-Class. The difference is the pent-up demand for the new-generation Benz, which added wagon variants to the range late last year. Furthermore, the new C-Class is getting good press for its dynamics and driveability – for which the 3 Series was previously the dominant player.

But Mercedes-Benz is not the only threat to 3 Series market share and sales.

Jaguar has thrown its hat into the ring with the XE – its first sub-XF model since the demise of the X-TYPE. Unlike the earlier car, the XE is shaping up to be a very credible offering in this segment, and Jaguar has long eyed off BMW's sales success with 3 Series as potentially low-hanging fruit for a competitor.

Alfa Romeo's new Giulia will debut globally in June, and the Italian brand is already telegraphing its intention to take business away from BMW.

During the local launch this week for the X5 M and X6 M, BMW Australia MD, Marc Werner told motoring.com.au that the prestige brand had already put in place tactics to forestall the new competitors snatching sales away from the 3 Series. Central to the big-picture strategy is model diversification – a relatively new innovation for BMW in this segment.

"First of all, the 3 Series product range is definitely [a core model], as is our X5, for example," he said. "So they are both equally important when it comes to the [market] share, the volume that we're selling in the Australian market.

"We have deliberately taken a step to further differentiate the 3 Series sedan by adding the 3 Series GT, adding the 3 Series Touring, adding the 4 Series Gran Coupe and the 4 Series Coupe. So you have to look at this totality of the variants that we are offering, [which] no other premium manufacturer is offering at this point in time.

"When it comes to customer choice, we actually have the biggest variety of models in the marketplace.

"We are about to launch the [mid-life update for] 3 Series...

"The product lifecycle – every three to three and a half years – there's a make-over of certain vehicles, and the new 3 Series sedan is about to be communicated to the markets worldwide, so we're not too far away from that.

"Every car manufacturer has product lifecycles, so you always see these 'ups and downs'. We are very much looking forward to the new 3 Series, which will be a fantastic car again – and we'll see some more substantial [sales] volumes on that car again."

More information about the 'LCI' (Life Cycle Impulse) update for the 3 Series will be officially announced in May – including word on the drivetrains, which are rumoured to include the three-cylinder engines already found under the bonnets of the latest MINI models and BMW's 2 Series Active Tourer.

"I'm not too concerned about our competitors," Werner continued, "and I always say competition is very healthy, because it keeps you on your toes. For decades we've always been [at] the very forefront with our 3 Series, and we are very confident that we'll continue to be successful in that particular segment..."

BMW isn't just fighting a battle on that one front, of course. Although the prestige brand set a new Australian sales record in 2014, and anticipates breaking that record again this year, Audi is closing in fast. Will Audi overtake BMW this year... or the next?

"We've launched more than 60 products in the last [three years]," Werner said, "so we actually have the youngest product portfolio in the market. This will put us in a very good position to further grow the business in the Australian market."

In case you're confused, those 60 products are actually different variants across three brands: BMW, MINI and BMW Motorrad – the company's motorcycle arm.

Werner appears confident the 3 Series can retain its market share and even build its position in the market. He hints that with the premium segment growing as fast as it is in Australia, more entrants may just soak up demand that the existing entrants couldn't supply anyway.

"The premium segment is growing; we'll probably see for the first time the premium segment reaching the 100,000 [sales] landmark... so there's plenty of room on the one side."