German automakers BMW, Audi and Mercedes break with traditional Teutonic luxury; shrink models and build more cars abroad

Chris Bangle, Bayerische Motoren Werke's former design chief, once likened the German carmaker's lineup to a bratwurst in three different lengths. Now, there's a lot more on offer, including convenient sizes.

BMW, which previously relied on the 3-, 5- and 7-Series sedans, has more than doubled its model offerings in the last 15 years to 26 variants by chiefly adding smaller vehicles. Audi and Mercedes have followed a similar path, veering away from the refined, powerful cars for which they're best known.


Further challenging the notion of what the brands stand for, the world's top three luxury car makers build more and more cars outside their homeland, thereby diluting the "Made in Germany" cachet.

These shifts ultimately may impact profitability, currently at the top of the industry, because their pricing power comes in part from selling customers a sporty, elegant image that they've spent decades crafting. "Every diversion from the essence of a brand poses a danger, because you have to make compromises and every compromise softens the brand in the long run," said Klaus-Dieter Koch, managing partner of Germany-based consultancy Brand Trust. 

"If you overstretch a brand, the ability to ask for a price premium vanishes." The three German automakers are broadening their lineups and global scale out of necessity because being niche players selling only $40,000-plus sedans is not sustainable in the long term.

The traditional draw of big engines is no longer enough on its own to lure wealthy customers, and higher sales volumes spread the billions in costs for developing cleaner cars to meet tighter emissions rules.