Why Every Automaker Is Getting In On The In-House Tuning Action

The first official car race (with more than one entry) took place in France in 1894. A short-listed field of 25 cars competed over a 79-mile route, and a Peugeot won with a staggering average speed of 12 mph. Yes, by today’s standards, they were horribly slow. But at the time, they seemed like machines of the future, and humanity fell in love with the automobile.

The technology, the challenge, the “speed” and the adventure the automobile promised lay the foundations for the passion for motorsport that still courses through our veins.

Pioneers like Karl Benz, Gottlieb Daimler, Henry Ford, Enzo Ferrari and Ferruccio Lamborghini, to name a few, realized what a vital role motorsport plays in the tough business of selling cars. Now more and more car manufacturers are drawing the same line between the dots, offering a specialist performance product line alongside their more humdrum offerings.

Think Mercedes-AMG, M, RS, N, Abarth, Ford Performance, Nismo, Gazoo Racing (GR), and lots more. To better understand the present boom, first a short trip down memory lane for some perspective.

Some car companies add racy stripes to the exterior of a limited edition model, along with a wing and model-specific decals, such as “SSS” for Super-Super-Speedy, custom leather trim for the cabin, and the “SSS” badge added to the stock steering wheel. This article is not about cars like that. Instead, we are focusing on bespoke in-house performance cars. The high performance cars hailing from car manufacturers’ in-house performance divisions, and not the marketing department.

Sports For You, For Me, For Everyone!

Ferrari. Porsche. Lamborghini. These are some of the brands with an exclusively sporty line-up. In other words, all the models in their line-ups are sporty by nature. They don’t sell entry-level hatches or sedans to appease the mass market. Even their SUVs, like the Lamborghini Urus SE, are super-sporty by nature.

Imagine a bottom-dollar Lamborghini hatch with old Fiat seats, a three-cylinder 50 hp engine that can do 70 mpg… slightly enticing maybe, but no thanks. And it won’t do the brand any favors either.

So these brands, strictly speaking, do not fall into the ‘manufacturer with an in-house tuning division’ bracket. All their cars are sporty by nature, even the entry-level ones.

The Red Pig Cometh

In the late Sixties, the Mercedes-Benz W109 300 SEL carried the brand’s luxury torch. The 6.3-liter V8 engine had 247 hp. Renowned for its ability to cruise in great comfort at more than 120 mph, the Mercedes also weighed 4 400 lb. It loved cruising, corners not so much.

Former Mercedes-Benz engineers Hans Aufrecht and Erhard Melcher decided to take the 300 SEL racing. They acquired an accident-damaged car, and reconstructed the W109 from the ground up, replacing original items like doors with aluminum parts.

The V8 was bored out to 6.8-liters and custom parts like camshafts, connecting rods, larger intake valves, a new in-take manifold and a full racing exhaust added. The result was 430 hp, sent to the rear wheels via a five-speed manual ‘box and racing clutch.

Bilstein supplied some trick suspension parts and, with the car’s weight trimmed down to 3 500 pounds, a race car of sorts had been created.

AMG entered the SEL in the 1971 24 Hour Spa-Francorchamps race in Belgium. Up against a famed field of racing cars, legend has it, the crowd and other teams openly made fun of the Mercedes ‘limousine’ lining up for the start. The press soon dubbed it “The Red Pig.”

No-one was laughing when the Red Pig finished the grueling race in second place overall, winning its class. The legend of AMG was born.

In 1972 rule changes limiting the Merc’s class to 5.0-liters made the W109 obsolete. AMG continued to provide customers with custom, high-performance cars. By 1988, Mercedes-Benz contracted AMG to turn its C-Class into a Touring Car winner, and soon it did just that.

In 1999, Mercedes became the majority shareholder of AMG, and the table was set for the amazing range of Mercedes-AMG cars now on sale. Gearbox and transmission development is handled in-house, and AMG’s one-man, one-engine philosophy is still in play today.

Meanwhile, in Munchen in Germany, another storm was brewing.

M Is For More

In May 1972, BMW created its in-house motorsport department called BMW M, a division tasked with running the company’s motorsport efforts. Its first project revolved around the 3.0 CSL and the iconic Batmobile. Later, the even more successful 530 MLE followed, cleaning up on the racing circuit.

By 1978, BMW’s M1 became the company’s first official M-badged car to go on sale to the public as part of the car’s homologation process to compete on international racetracks. All 400 cars were snapped up and the (official) legend of the M department was cast in stone.

The M3 followed, then the M5 and… well, nowadays, BMW can’t build their M cars fast enough.

GRRRR! A New Age Of Fast Toyota

Toyota has been taking part in motorsport since forever, and is currently involved in Formula 1, NASCAR, IndyCar, sports car racing, WRC, WEC, Endurance Racing, the Dakar Rally, Formula Drift… you name the motorsport, and there’s a Toyota in there somewhere.

But it was only in 2015 that Toyota officially jumped on the in-house tuning wagon when it created the Toyota Gazoo Racing (GR) division. With affiliates around the globe, the GR operation benefits from a massive resource pool that it can tap into.

The GR division has also gifted us a new breed of sporty Toyota, over and above the run-of-the-mill Camry. Think GR Corolla, GR Supra and GR86. All GR-branded derivatives. There are a lot of rumors (and a video posted by Toyota) about a bunch of upcoming new GR models.

This may include a new Supra, modern incarnations of the MR2 and Celica, a new GR86 and a GR GT3. The GT3 is of particular interest. The GT3 racing car is ostensibly being developed for a customer racing program, but a road-legal consignment may be on the table, too.

The Oriental Touch

When a company names its performance branch after the famous Nurburgring-Nordschleife racetrack, then you know they mean business. That’s exactly what Korean brand Hyundai did, calling its performance brand “N”, and setting up its Technical Center at the track, using it to develop all its N cars.

Hyundai went all in with N in 2012. The company recruited two high ranking experts from BMW M and one from Mercedes-AMG to ensure the cars that roll off the N production line are authentic, the real deal.

In October 2024, Hyundai sold a record-breaking number of cars in the USA, totaling 71 802 units. The Elantra N showed an increase of more than 370% over the 2023 comparable numbers – so whatever they are doing at N, it’s clearly working a charm. But more about the detailed numbers a bit later. First, a look behind the rationale of a performance division.

Good, Fast… Faster

Millions of customers want a car like this, and aspire to owning one. And it mostly comes down to that seed planted in 1894 at the first car race that is still in full bloom, encompassing the same passion for speed, challenge and adventure.

This is the essence of the automobile. The smell of high-octane racing fuel or burning rubber or an overheating clutch when you are next to a racetrack. The sound of the screaming engine, reverberating through your body. The rush of air as it blurs past you. The sound of the gear changes and bangs and pops long after you lose sight of the racing car.

If someone could bottle the feelings and emotions you experience next to a racetrack, they’d be a millionaire. And that’s why cars like a Mercedes-AMG or BMW M or Toyota GR or Hyundai Elantra N are at the top of most gearheads’ Christmas lists. Cars like these provide a taste of that amazing motorsport world.

Besides the emotive factor, another major motivator is profit margins. The bottom line margins on a mass-produced low-budget car are traditionally low, while the margins on an exclusive 670 hp Mercedes-AMG C63 are considerably higher.

Exclusivity is another drawcard. Audi’s RS department recently created 660 Audi RS6 Avant GT models. The run-of-the-mill RS6 Avant retails for around $160 000 for the top-spec version. Thanks to the exclusivity factor (okay, and a few extra horses under the hood) the GT sells for almost $100 000 more.

BMW M now sells more than 200 000 M cars per year. Mercedes-AMG says it sold 31% more cars by quarter three of 2024, compared to the same period in 2023. And there’s that number from Hyundai, sales of its Elantra N up by a massive 370% over 2023.

In 2023, Toyota’s GR Corolla made up just 2.4% of Corolla sales in the USA. That seems insignificant, but by comparison, Toyota outsold its direct rival, the Volkswagen Golf R, by about 45%. It’s clear: Proper in-house tuning is a profitable business.

We want M and AMG and RS and Quadrifoglio and N and Alpine and GR and all other performance brands. We really want them.

The better news is that more and more car companies want them too, as they realize the profitability of an authentic in-house tuning division. Existing performance divisions are working on a host of new models. BMW M, for instance, has no less than 46 different M options on the menu for 2025. Then there are cars like Toyota’s GR GT3 and Hyundai’s Ioniq 6 N to look forward to in 2026.