It's disappointing news for the Mercedes Car Group as BMW tops the luxury car market for the first half of 2004.

With a rise of 8.5%, the BMW marque sold 6,183 more cars than the Mercedes group (down 3.3%) during the six-month period, enabling it to be first past the chequered flag for the first time in seven years.

The introduction of new models such as the X3 small offroader and 6-Series coupé has contributed to BMW's success as it completes its model line-up.

Modestly claiming that sales ranking is less important than overall profits, BMW has nevertheless prompted Mercedes to rise to the challenge. "We want to be the number one premium brand on a long-term perspective. It will be completely different next year and we will have increases again" affirms Mercedes.

Mercedes is pinning its hopes on the redesign of model ranges such as the A-Class, and confidently predicts sales will rise later in the year to outsell last year's 1.3 million by 50,000 units.

Market analyst JD Power-LMC agrees the outlook is optimistic for Mercedes, predicting a 17% rise in sales next year as the company updates yet more models.

But Daimler Chrysler, the parent company of Mercedes, faces an even greater challenge as it attempts a new slant on bettering BMW's margins – it hopes unions will accept cuts in wages.

Data sourced from: Financial Times; additional content by WARC staff