Increasingly fierce competition in Australia’s usually serene premium-car segment has led to a spat between Audi Australia Pty. Ltd. and BMW Group Australia, as each accuses the other of discounting their vehicles – something not usually done in the segment.

The Melbourne Age says the pressure is on as Australia’s luxury-car sector has failed to grow as fast as the overall market. Audi has seen sales increase 41% this year to close in on segment-leader BMW.

BMW Australia Managing Director Geunther Seemann started the spat when he ignored Audi and said BMW has only two competitor brands in Australia, Mercedes-Benz and Lexus, the newspaper reports.

“Premium cars have rear-wheel drive because of comfort and design,” Seemann is quoted as saying, taking care not to name Audi, which sells front-wheel-drive cars and all-wheel- drive vehicles, mostly based on front-drive designs from Volkswagen AG.

“A premium brand never, ever does short-term actions to increase sales,” he says. “For example, offering tomorrow a A$15,000 ($12,626) discount, because you will lose recent customers who bought the car for the normal price.”

Audi Australia chief Joerg Hofmann reportedly reacted at the launch of the TT roadster and S3 hot hatchback in Australia.

“Every manufacturer is reacting to us in different ways, smarter and less smart ways,” Hofmann is quoted as saying.

“I think it’s a quite strong message, if somebody puts a big amount of dollars (in discounts) behind an almost brand-new volume model,” he says in reference to BMW’s 3-Series. “(It) is a car which was launched a year ago and now already supported by thousands of dollars (in discounts).”