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BMW, Audi vehicle sales rise as luxury sales head to a record

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, and rivals Audi and Mercedes reported increases in vehicle sales last month, as buyers of premium cars push sales toward a record this year.

BMW-brand sales increased 3% to 80,629 vehicles, while Volkswagen AG's Audi's sales gained 8% to a record 75,150 units. DaimlerChrysler AG's Mercedes-Benz division yesterday reported a 14% rise to 73,500 units. BMW and its German peers dominate the market for luxury cars, demand for which has soared amid rising stock markets, record bonuses and the economic growth in both their domestic market and overseas. BMW and Audi expect sales to reach records this year, while the Mercedes group is targeting sales for Mercedes-Benz little changed from last year's 1.15 million units. „What I think you are seeing is that the German luxury industry is clinging to its strengths, well-engineered products and very attractive design,” said Stephen Pope, head of equity research at Cantor Fitzgerald in London, in an interview today. „With a wealth of money about now, people are willing to pay more because they want the iconic badges.” Stock markets worldwide, including Standard & Poor's 500 Index, the FTSE 100 and Germany's DAX, have touched highs over the past 12 months, resulting in record bonuses within the financial industry. BMW is working to retain the top spot in luxury sales amid a challenge by both Mercedes-Benz and Audi. The Munich-based automaker last year rolled out a new version of the X5 sport- utility vehicle and 3-Series coupe to counter introductions by both Mercedes and Audi, including the Audi Q7 and Mercedes M-Class and GL-Class SUVs.

Martin Winterkorn, Audi's former CEO and now Volkswagen Group's CEO, has closed in on Mercedes and BMW in recent years with new designs and models, such as the Q7. Audi surpassed Mercedes in worldwide sales last month for the second time within a year. Winterkorn has a goal of selling 1 million Audi vehicles in 2008 and 1.4 million by 2015. Audi is important to the entire Volkswagen Group's success because the luxury brand's earnings have helped offset losses at other divisions, including the namesake brand. DaimlerChrysler CEO Dieter Zetsche is reorganizing Mercedes by lowering production costs and eliminating jobs at German factories. The company has benefited from new models such as the S-Class sedan, the A- and B-Class compacts as well niche cars like the CLS sport sedan. A new C-Class, the marque's entry-level sedan, will go on sale next month. Premium carmakers' fortunes contrast with those of volume manufacturers such as PSA Peugeot Citroen and Ford Motor Co., both of which reported losses in their most recent quarter or half. Rebates, stagnating demand for cars in the world's largest markets and competition from Asian manufacturers have put pressure on European and US automakers to reorganize and revamp their lineups. (Bloomberg)