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BMW has vowed to wrestle back the European crown from Mercedes-Benz, vowing to become the “number one again at the end of the year” in luxury cars.

Chief executive Harald Krüger promised an “offensive” from the German premium marque this year, after the group slipped behind its Daimler-owned arch-rival during 2016.

The BMW brand sold 784,395 cars in the EU last year, compared to 807,336 sold by Mercedes, sales figures from industry body ACEA show.

Mercedes launched a series of face-lifted models during the year, and saw its EU sales climb by 100,000 during 2016 – overtaking BMW.

In order to become the biggest premium seller in Europe, BMW must also surpass Volkswagen-owned Audi, which saw its EU sales rise from 739,537 to 803,520 in the year.

Earlier this month BMW – which also owns the Mini and Rolls-Royce brands – announced headline results that lagged expectations, with operating profit falling 2.2 per cent to €9.39bn, missing analysts’ estimates of €9.82bn.

Mr Kruger on Tuesday said that there is a “suite of criteria defining the number one position” including “profitability, attractiveness, innovation and leadership”.

The company said it aimed to increase profits, sales and volumes this year, as it revealed more details of its performance last year in its annual report.

Group revenues rose 2.2 per cent to €94.2bn, while pre-tax profit rose 4.8 per cent to €9.7bn. Global car deliveries rose 5.3 per cent to 2,367,603.

The company’s automotive division, which strips out motorbikes and its financial services division, saw operating profit fall slightly to €7.7bn, down from the previous year’s record of €7.8bn.

Margin in its automotive division fell from 9.2 per cent to 8.9 per cent, though it remained within the company’s target of 8-10 per cent.

But its cash generation increased, and at the end of the year the group had €19.5bn of cash – far ahead of the €16.6bn expected by analysts at Exane BNP Paribas.

Exane’s analyst Stuart Pearson said: “Underlying performance remains strong with impressive cash flow, despite a still weak point in the product cycle for BMW.”

The company plans to launch 40 new or revised models globally by the end of 2018, and will make a new super-sized SUV – an X7 – that will sit alongside its flagship 7-series saloon.

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