MUNICH • Less than a year after BMW introduced the latest iteration of its flagship 7-series, a roomy sedan that can park itself via remote control, the automaker has quietly conceded that it landed with a thud.
Even so, the US$81,500 (S$110,849) car is so vital to the bottom line that BMW is doubling down with a coupe variant. A sporty two-door version of the 7-series is in the works for as soon as 2019, according to a person familiar with BMW's plan, who asked not to be named because the plans are not public.
The luxury coupe is the first of several new versions BMW is considering to give sales of its highest-end car a lift. Mercedes-Benz used a similar strategy to cement the position of its S-class as the world's best-selling top-of-the-line sedan.
Just four years ago, the 7-series was at parity with its Mercedes rival. Today, sales have fallen 40 per cent below those of the S-class and are only slightly ahead of Tesla Motors Inc's Model S.
Next year will be even tougher for the 7-series, with Audi poised to introduce a self-driving version of its A8 flagship. BMW's aim with new variants is to pull even with the leader again, according to the person familiar with its plans.
Success with the 7-series is important for both for BMW AG's image and its bottom line. After a decade of ruling the world of luxury cars by filling nearly every market niche from two-seat roadsters to brawny sport utility vehicles, BMW is on the cusp of losing its lead this year. A spiffier look and new crop of SUVs helped Mercedes outsell BMW by more than 30,000 cars this year through July.
The fortunes of a company's most expensive car tend to reflect the company as a whole, with the halo - or shadow - of the model extending across the entire brand. High-end sedans are more lucrative than smaller vehicles, making them a crucial source of cash to invest in new technology. And they are typically the place where automakers introduce new features, providing ground for ideas that filter down into less expensive models.
"The 7-series hasn't managed the same 'aha' effect as the new S-class, which is what Audi will be going for too with its new A8," said Mr Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt. "It's lacking that special something."
Internally, BMW has blamed the 7-series slow sales on too few technological advances and boring design, a person familiar with the plans said. Features such as gesture control, which uses up to five hand signals for functions such as radio volume, have not ignited the same customer interest as the likes of Tesla's Autopilot.
And the 7-series does not offer the variants available in the S-class, which comes in six versions, including a convertible and an ultra-luxury model called the Maybach. BMW will also bring out a competitor in the range above €150,000 (S$228,000), development chief Klaus Froehlich told Automotive News this year.
That would be roughly the same price category as the Maybach. In the meantime, a plug-in hybrid and the first high-performance version of the current 7-series sedan will contribute to sales, BMW says.
Thanks to last year's revamp, deliveries of the car more than doubled in July to 5,025 vehicles and a company representative said it expects "this positive trend to continue over the course of this year".
The wild card will be Audi's A8, which will have self-driving systems more advanced than those of either the 7-series or the S-class. Drivers will be able to let the car take over completely in highway traffic jams at speeds of up to 60km an hour, according to the company.
Unlike Tesla's Model S and this year's Mercedes E-class, Audi's car will not then require a hand on the wheel.
"The new A8 will be quite a meaningful departure from the current model," said Mr Stuart Pearson, an analyst at Exane BNP Paribas in London. "You'd expect to see 7series sales start to decline again when the A8 comes out."
The fat return on sales makes clear why carmakers are fighting for buyers in this segment. Mercedes' profit margin on the S-class was 14 per cent last year, versus 9.5 per cent across the Daimler AG unit's auto division, investment banking advisory firm Evercore ISI estimates. BMW saw an estimated 11 per cent return on the 7-series, exceeding the 9.2 per cent across its automotive unit last year.
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