EUROPE’S PREMIUM PUZZLE
Europe’s mainstream auto manufacturers are being squeezed between premium and ‘value’ brands. Tony Lewin reports.
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does not take a trained statistician to spot a pretty dramatic trend in the make-up of European car sales, be they the returns for individual months or for the whole of 2011. Paradoxically, despite the background of continuing economic stress, high-status premium brands are enjoying record profits and their best-ever sales; meanwhile their mainstream counterparts, lurching from one calamity to the next, are facing an existential crisis. At the same time, Asian-badged interlopers are snapping at their heels, stealing customers from those familiar mid-market brands and further undermining their viability. Outwardly, car industry chiefs navigated the January results season with a sense of relief that, rather than crashing alarmingly, the overall sales total had slipped by little more than 1 per cent compared with the previous year – a year whose figures had been artificially flattered by the last of the scrappage incentives then in force in many countries. Inside, however, many CEOs knew how much they had had to spend
8 Industry Europe
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to lure reluctant customers to their products; not only was such a level unsustainably high but, more importantly still, an attack was coming from below, too. This clear new trend may come to mark a historic turning point in the European car buying preferences. A couple of starkly contrasting sets of results will make this clear. Despite the best efforts of costly promotion campaigns, sales of Renaults, Peugeots and Citroens fell by over 8 per cent in 2011, as did those of Toyota. Honda and Mazda plunged even more alarmingly, losing between a fifth and a quarter of their customers. For Fiat it was a giddy-making 17 per cent slide. Yet, over the same space of time, and with the same worrying messages coming from the European economy, sales of Audis and BMWs in Europe shot up by 9 and 5 per cent respectively. Mercedes grew, too, as did Toyota’s premium label Lexus. Something is clearly happening here, yet the too-hasty and perhaps counter-intuitive conclusion that these results herald a shift from small cars into big and prestigious ones
would also be wrong. Among the industry’s most spectacular gainers have been the Koreans, with their mainly low-cost focused Hyundai and Kia brands, both up almost 12 per cent; also up by a similar proportion were Volvo and Nissan. Mini, which makes no big cars at all, boosted its sales by nearly one fifth. Market leader Volkswagen, which makes cars of all sizes, was also able to increase its sales sharply – yet Ford and General Motors, in the shape of Opel Vauxhall, took knocks of 3 and 2 per cent respectively, despite introducing fresh models. Two parallel phenomena appear to be in evidence here, and both are working to the detriment of the classic middle market volume sellers, as personified by models such as the Opel Astra, Renault Mégane and Peugeot 307. On the one hand there is a distinct move away from the familiar big brands towards premium labels such as BMW and Audi; this shift is an entirely understandable one in troubled times as buyers seek the security and lasting appeal of a blue-chip marque in preference
