Daimler AG (USA) (DDAIF), Toyota Motor Corporation (ADR) (TM) – Who Will Win the Battle for Global Domination: Mercedes, Lexus, or BMW?

Moreover, China recently surpassed the U.S. to become BMW’s largest market by sales. Even better? In 2012, BMW had a 23.6% luxury market share, which was second only to Volkswagen AG (ADR) (OTCMKTS:VLKAY)‘s Audi market share of 29.6%. That’s higher than Mercedes’ share of 20.6%, and significantly higher than Lexus’, which has yet to gain any noteworthy share, because so far, it hasn’t built a manufacturing plant in China.

The potential for sales profits in China is substantial, but that doesn’t mean a Chinese venture is without risks. Just recently, BMW came under fire in China for “insufficient investment in environmental protection measures” at one of its flagship manufacturing projects that was looking to double capacity. Whether that will have a lasting impact on that specific BMW venture is uncertain, but it does highlight that there are risks when expanding into a new country.

The winner is: BMW
Last year, Mercedes took home the title of best-selling luxury brand in America — the world’s top luxury-car market. Its 2012 sales were 245,926 (up 12%), which came to 17.3% of the luxury market. However, BMWs 2012 sales were 244,061 (up 10.4%), which came to 17.1% of the luxury market. That’s a mere 1,865 vehicles less than Mercedes. Lexus, by contrast, sold 213,555 units in 2012 (up 23.3%), which accounted for 15% of the luxury market.

But this year, BMW is expected to surpass Mercedes. And even if it doesn’t, I still think it’s one of the best bets for luxury-car manufacturers. Lexus’ growth is impressive by volume, especially by a percentage basis, but because it’s not actively pursuing manufacturing plants in China, its ability to grow in that market is pretty limited. BMW, by contrast, is actively pursing its venture in China, and even though it’s hit some snags, the potential profitability outweighs the risks. Consequently, if I could choose only one luxury-car maker to invest in, it’d be BMW.

The article Who Will Win the Battle for Global Domination: Mercedes, Lexus, or BMW? originally appeared on Fool.com is written by Katie Spence.

Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter: @TMFKSpence. The Motley Fool has no position in any of the stocks mentioned.

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