Germany's luxury car makers will show two faces to their global customer base at this week's Frankfurt Motor Show: one mean and the other green.
On the mean side, an array of high-horsepower performance cars making their debut here represent exactly what loyalists have come to expect from the big German names: road-dominating machines that define luxury as power. They include BMW's new M5, Audi's sleek S7, the latest from Mercedes-Benz's AMG performance brand, the 422-horsepower SLK 55 AMG, and the new Porsche 911.
More intriguing, and risky, are the cars that represent the green side. Mercedes has parked a fleet of electric Smart cars outside one of the Frankfurt show's main gates. Inside, the auto maker is featuring a new B-Class, a car that looks like a mainstream compact hatchback and gets compact car mileage, but has a big Mercedes star emblem on the hood.
It's a delicate balancing act, but one the luxury car makers are forced to perform as they figure out what the customer of the future will want. Volkswagen AG luxury brand Audi, for example, invited academics and industry experts to a conference Monday to discuss the challenges of a near future when 70% of the world's people will live in congested mega-cities. They also predict attitudes about car ownership will be upended by a generation that cares more about slick smartphone apps than 0-to-60-miles-per-hour times.
The dichotomy is on view on BMW's show stand, which features an electric BMW i3 concept car made of aluminum and carbon fiber with the motor over the rear axle and a top speed of 93 mph. Nearby is parked a new edition of the auto maker's mighty M5 super sedan, with a 560-horsepower petroleum-fueled V-8. BMW stresses that the new M5 is both more powerful than its predecessor and 30% more fuel efficient.
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The i3 and a larger plug-in hybrid concept called the BMW i8 are not show toys, says Ulrich Kranz, head of BMW's "i" brand project. The i3 shown at Frankfurt is close to what customers will be offered in 2013 when production begins at a factory in Leipzig, Germany. "It will not be a niche car," Mr. Kranz says. "We are talking about a serious car and mass production."
Not so long ago, the three big German luxury car brands offered their wares in good, better and best; small, medium and large. All the vehicles burned gasoline or diesel. All liked to be driven fast, handled with authority and offered the latest safety technology. Parked in the driveway or wheeled up to a valet stand, they required no explanation.
Volatile oil prices, urban congestion, increasingly demanding regulation and shifting consumer attitudes are putting this business model to the test.
"The simple way that we develop, produce and sell a car...is going to change dramatically," says Peter Schwarzenbauer, Audi's head of global sales and marketing. "It will be much more complex."
Industry executives are wrestling with how to retool their game to appeal to a younger generation of technology-savvy consumers.
Audi is giving prominence to small electric concept cars. It's also emphasizing the idea that in the future, what will matter to its customers is more than a car, but "mobility," a concept being bandied about at the Frankfurt show that emphasizes giving consumers information about how to get around in crowded cities, locate parking spaces and use smartphone apps to arrange car-sharing. But exactly how to profit from this, and how best to present mobility products or services to customers, is still unclear.
BMW, for example, has launched a car-sharing venture in Munich and has established a $100-million fund to invest in mobility ventures. "I'm doing constant beta [testing]," says Tony Douglas, head of BMW Mobility Services for the BMW i brand.
To pay for app-economy experimentation—and expensive no-petroleum car technology—European luxury marques must keep their traditional clientele happy and plunking down big money for fancy cars for as long as possible. Yep, there's an app for that: horsepower. To be sure, There's plenty of muscle on display among the Frankfurt auto show offerings.
The surprise here is that many of the new green vehicles, such as BMW's i3 and i8, aren't conventional cars retrofitted with batteries. They are built in an entirely different way. The i3 has an aluminum chassis that contains the battery pack and electric motors and serves as the base for a carbon-fiber passenger compartment. The total weight of the vehicle isabout 2,760 pounds.
Although the top speed isn't high, the car will accelerate to 60 mph in less than four seconds. "It's a low-weight vehicle with a very powerful engine and a low center of gravity," Mr. Kranz says, echoing the formula that BMW has used to appeal to buyers for decades. "I'm pretty sure our customers will pay the additional premium."
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