That is pretty crazy that Audi sold more cars than BMW. Audi is something to really watch out for. They don't have many models compared to MB or BMW, but are still selling a lot of cars.
True. Small SUV still missing in their model line. And a large coupe.
Audi is VERY popular in Europe - since it offers best value for money, and also has very practical products. MB & BMW have a bit too special status to appeal to such broader customer base as Audi do (especially outside Germany). Audi is still considered more "common" & more "acceptable" than BMW & MB - also due to FWD, since some people (esp. European females) are still a bit afraid of RWD. Audi have also stayed constant in built quality & materials, while BMW & MB failed at certain moments - boosting Audi image for free!
And mind that Audi Avant models are VERY VERY popular in Europe. Also A3 vs 1er gives Audi huge advantage since A3 Sportback is much more practical & comfortable / roomy than 1er 5dr hatch - therefore attracting more customers. Also Audi are usually priced a bit lower than comparable MB & BMW models (with same equipment!).
Audi is also on the roll in China - enjoying the advantage of long-term presence there, and much larger production capacities than BMW & MB.
IF ... a big if ... Audi were performing better in US market they would be #1 already. Yet they have a good chance to become #1 in the future still. Why? Mainly due China (where -as explaind before - they have significant advantage over MB & BMW) & mainly due A1-family. As you know for sub-compact models MB & BMW use separate brands: Smart & MINI (and possibly another brand coming in the future), while Audi will brand their sub-compact cars (A1 platform models) Audi. So, add another 150,000 units to Audi total annual sales ... BINGO!
Audi are very formidable. Do not forget they have excellent engineers, and enjoying all advantages VW & Porsche companies can offer (especially in areas like R&D, purchasing, production etc). MB & BMW better start to cooperate ASAP.