BMW 340-hp hybrid

BMW takes aim at Lexus with 340-hp hybrid models

BMW, the largest builder of luxury vehicles worldwide, is expanding their lineup of hybrids with 340-horsepower gas/electric versions of their two best sellers, clearly with designs on Lexus market share.

BMW’s hybrid lineup will expand to four vehicles next year with versions of the 3- and 5-Series sports sedans combining turbo-charged six-cylinders with an electric motor to boost both economy and performance. This edges closer to Lexus, the leader in hybrid luxury, who offers five hybrid models all of which originated as a performance option.

"Lexus so far effectively had a monopoly on luxury-hybrid models," said Jesse Toprak, vice president of industry trends forTrueCar.com, quoted in a Bloomberg article by Chris Reiter. "Their dominance will be challenged for the first time."

Audi and Mercedes-Benz are also getting into the hybrid market soon after months of focusing on fuel-efficient diesel engines popular in the European market. BMW and Mercedes may surpass Lexus in U.S. sales for the first time this year in over 10 years.

Lexus got a leg up in the hybrid race from sister company by Toyota’s trailblazing development of hybrid in the Prius. Lexus, whose hybrid lineup includes CT, HS, RX, GS and LS models, ranging from $29,120 to $112,250, reportedly attributes 13 percent of their U.S. sales this year to hybrids, contrasted to less than 1 percent of BMW and Mercedes sales.

Still the combination of gas and electric engines has yet to take a major out of the market as hybrid prices have relegated them to the fringes of the automotive market.

"We see very little demand for the hybrid versions that are currently available because of the price," said Robert Rademacher, head of German auto dealer association ZDK. "We're looking forward to see the reception of the new models."

The new hybrids from BMW, Mercedes and Audi may have a buoyant effect on hybrid sales, however. Full hybrids are expected to double their slice of luxury car sales to 6.6 percent by 2015 from 3.4 percent this year, according to LMC Automotive.

"It's easier to pass on this technology premium to upper-tier buyers," said John O'Dell, senior editor at Edmunds in Santa Monica, California. "They're more interested in standing out and willing to pay for it. If you're going to break open the market for hybrids, you're going to do it at the high end.”

Someone who notices hybrids on the road knows they have found a niche in the UMC quite fond of them. Jonathan Wales is one such, a 55-year-old finance director who bought a Lexus RX450h last year to get him through the sometimes snowy 40-mile commute into London.

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"I was looking for something comfortable, but fast, luxurious and economical," said Wales. "It's performed really well," and the electric motor’s quiet ride has been an extra bonus. “The perverse thing is that I kind of enjoy getting stuck in a traffic jam," said Wales. "If you have to sit in a traffic jam, I like to have it quiet."

BMW is hoping folks like Wales will choose a hybrid model of the 5-Series next year, or the gasoline-electric version of the best-selling 3-Series next fall. These models add to the currently available hybrid 7-Series and X6 models.

Audi will enter the hybrid segment this year with a version of the Q5 sport-utility vehicle that sells for 53,700 euros ($74,300), 9,800 euros more than a similarly equipped conventional version. For the price, the buyer gets about 7 miles per gallon in better fuel economy from a vehicle that accelerates to 100 kilometers (62 miles) per hour in 7.1 seconds, a half a second faster than the gasoline-only version.

Audi will join the hybrid market with versions of the A6 and A8 sedans in the first half of 2012. The automaker will then turn to a line of plug-in hybrids, with rechargeable batteries and greater electric-only range. Audi is planning plug-in versions of the A3 compact, A4 sedan and Q7 SUV beginning in 2014.

"Plug-in hybrids bear the greatest future potential because they combine, better than anything else, the benefits of combustion engines and electrification," said Peter Schwarzenbauer, Audi's sales chief. "We believe the plug-in hybrid will carry the day over the medium term."

Mercedes, who sells a hybrid version of their flagship S- Class sedan, follows only PSA Peugeot Citroen in combining diesel engines with electric motors. The E300 hybrid will sport a four-cylinder diesel plus an electric motor, more aimed at efficiency instead of performance like the others.

"Customers are slowly developing a readiness to pay a certain extra for new sustainable driving technology," said Thomas Weber, development chief at Mercedes, which plans to roll out hybrid versions for all its main model lines.

"The question is: are you prepared to pay that extra just to have 'hybrid' on the back," said Al Bedwell, an analyst with LMC in Oxford, England. "So far, the offerings haven't been good enough."