There’s an old saying: Dress Italian, speak French, drive German. Let’s leave couture and language to Vogue and Vanity Fair and focus on why German cars are the worldwide standard for performance and luxury. You could argue that the Brits make the most elegant and refined luxury cars, but nobody ever accused Rolls-Royce (a division of BMW) of building a performance ride. 

So, back to the German badges. BMW, Audi, and Mercedes-Benz represent the global best in luxury and performance, though Audi doesn’t have the same oomph for some reason. It might be that Audi is the premium brand for Volkswagen, so snootier car aficionados look at an Audi A8 as a glorified VW Phaeton. On the other hand, BMW and Mercedes are unique. Sure, they own other brands (Smart, Mini, Rolls-Royce), but they’re stand-alone brands.

However, according to CNBC, Mercedes has overtaken its close competitor in the past couple of years. Why has BMW slipped, and how has the automaker responded?

BMW and Mercedes are both more than 100 years old

Both BMW and Mercedes-Benz were founded in Germany in the early 1900s. But BMW was originally an aircraft engine and household appliance manufacturer that fell into making automobiles after World War II, CNBC reports. Mercedes, on the other hand, has been building luxury cars since the 1920s, so it has a head start on its rival.

But until only a couple of years ago, BMW sold more cars every year than any other luxury brand. So, what happened?

Why has Mercedes overtaken its competitor in sales?

Since 2016, Mercedes has been the best-selling luxury brand in the world, CNBC reports. The question is, has Mercedes gotten that much better, or has BMW fallen behind because of internal problems?

Mercedes is arguably doing plenty right, but BMW has made a couple of mistakes. 

BMW isn’t keeping up with consumer demands

It’s a given in the automobile manufacturing world that the internal combustion engine is a dinosaur and that the future is in alternative fuel sources. And right now, that’s electric. In hybrid or all-electric form, EVs are no longer the future; they’re the now.

You might mention BMW’s all-electric i3 and i8 to argue that point. But the i8 is out of production, and critics have widely panned the compact i3 as failing to meet the company’s standards in aesthetics and performance. So that’s been a double fail. 

It offers a narrower range of models than Mercedes

Another problem for BMW is that it doesn’t offer that many choices. On the upside, there are three or four trim levels in cars and SUVs (though BMW once preferred “SAV” for “sports activity vehicle” because the whiff of “utility” in a Beemer is too middle-class for words). But your choice depends on your budget.

If you’re looking at an entry-level car, it’s a 3 Series. If you’re looking for a big family ride to the condo in Aspen, it’s the X7 SUV. The downside? Consumers want choices, especially in the luxury price range. If the 3 Series is in your budget, you get a sedan. The same thing goes for a bigger budget and the 7 Series, also a sedan. For most buyers willing to pony up $70,000-plus for a car, they want more choices. 

BMW is working to get back on top

BMW’s new CEO, Oliver Zipse, has announced plans to shake off the dust and drive the company into the 21st Century, CNBC reports. The electric subdivision has models debuting, and the high-performance M line also has new editions on the drawing board.

Experts think that now that BMW is refreshing the lineup, it’s just a matter of getting the word out for the company to reclaim the top spot. For many consumers, especially in the booming Chinese market, BMW remains the ultimate driving machine.