“Our target is to reach significantly more than 30,000 unit sales per year,” the head of Mercedes-AMG, Ola Kaellenius, told reporters Tuesday at the unit’s headquarters near Stuttgart. Last year, Mercedes-AMG sold about 20,000 cars.
Mercedes-AMG has been a wholly-owned subsidiary of Daimler since 2005 and specializes in spicing up the brand’s luxurious cars with more powerful engines or customized design features. It competes with BMW’s M GmbH unit, Audi’s Quattro GmbH and ultra-luxury sportscar makers, such as Aston Martin.
Mr. Kaellenius said Mercedes-AMG posted the best first quarter in the unit’s history with sales growth of 30% on the year, reflecting booming demand for luxury cars in many markets across the globe. He didn’t provide an absolute number for first-quarter car sales.
Sticker prices at AMG start at about €70,000 euros ($88,056) for the beefed-up version of the Mercedes-Benz C-Class model. The U.S. is AMG’s largest market, followed by Germany. China overtook Japan last year as AMG’s third-largest sales region.
Mr. Kaellenius said the plan to grow sales volumes at AMG significantly in coming years is a “crucial part” of the Mercedes-Benz brand’s long-term targets until 2020, “especially in terms of profitability.”
Mercedes-Benz is reaping more revenue per car than BMW and Audi, but the two German rivals posted higher profit margins and sales volumes in recent quarters.
Last year, Audi overtook Mercedes-Benz as the world’s second-bestselling premium car maker behind BMW. Audi is the premium brand and the biggest earnings contributor of Volkswagen AG, Europe’s largest auto maker by sales.
“Mercedes is lagging its German peers BMW and Audi on almost every metric,” Sanford Bernstein analyst Max Warburton wrote in a note to clients. “Its growth rates are slower—in all markets, including China. Its unit sales are lower. Its margins are poorer—BMW and Audi at over 11%, Mercedes at under 9%,” he wrote.
Mr. Warburton rates Daimler stock as market perform. “In absolute terms it is now very cheap, and still contains two strong operations—Mercedes and Daimler trucks. However, we are concerned by the lack of growth at Mercedes,” he said.
Daimler Chief Executive Dieter Zetsche has vowed to fight back and wants to reclaim the top spot in the premium car segment by 2020 at the latest.
Last year, Daimler decided to discontinue its Maybach ultra-luxury brand after years of disappointing sales to focus all efforts on the core Mercedes-Benz marque. Apart from raising the profile of AMG sports cars, Daimler plans to boost Mercedes-Benz’s footprint in the fiercely competitive small-car segment.
Mercedes-Benz presented the new generation of its A-Class compact car at the Geneva auto show in March. The new vehicle features a less bulky, more sporty designed to appeal to a younger group of customers.
Mr. Kaellenius confirmed AMG will expand its product portfolio and launch a high-performance version of the new-generation A-Class in the coming months. He said the lower starting price compared with AMG’s C-Class version will open up a new customer group for the unit, but declined to elaborate on the car’s sticker price.
Mercedes-Benz is launching five new compact cars to boost sales volumes in coming years, including a small coupe and a compact sports-utility vehicle. Mr. Kaellenius said AMG could launch a high-performance version of “at least three of them.”
He said it can’t be ruled out that AMG’s profitability might decrease if small cars account for a larger portion of sales volumes as compact cars are usually less profitable than large, souped-up vehicles. But he stressed that AMG will still help to improve the overall profitability of Daimler’s Mercedes-Benz Cars division. The division comprises the Mercedes-Benz, Smart and the soon-to-be-retired Maybach car brands.
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