We took Mercedes and examined the list prices of the
regular cars within the various production classes it produces, then
compared them with the list price of the equivalent AMG-branded car in
For example, the entry level A-class hatchback costs €23,000
but the equivalent AMG version costs almost double. Of course,
comparisons are muddied somewhat by the fact that the performance car
naturally has a better engine and tends to come with additional trimmings,
however, these cannot account for the price premium on their own.
About two and a half times more expensive while the AMG S-class is
about double the price of the standard model. The weighted average
selling price on an AMG car is about €90,000.
A similar pattern emerges at BMW. The M performance version of
the X5 SUV costs double the regular version. At the smaller end of the
BMW range, there is a similar mark-up as the M 2-series coupe costs
€60,000, double the price of the non-performance equivalent. The
weighted average selling price on a BMW M car is about €80,000.
It is important to note that although there is considerable pricing
power for performance cars within each brand, it does not necessarily
mean the pricing power holds in the same way between brands. If we
examine the performance SUVs of Mercedes, BMW and Audi, and then
compare them to the equivalent SUV made by Porsche an interesting
discriminator emerges. While the €140,000 charged by Porsche for its
SUV is about the same as the Mercedes AMG version, it is 15 per cent
higher than BMW’s equivalent, and 30 per cent higher than Audi’s.
Thus effective brand management results in better investment returns