At the 2000 Paris auto show, three major volume manufacturers had big hopes for the new upper-medium models they were introducing that year. But something went wrong.
The three new cars the Citroen C5, Ford Mondeo and Renault Laguna II have all performed well below expectations, even though theyve all been generally well received in the consumer automotive press.
Other upper-medium competitors have also seen their sales slide. The segment, which also includes cars such as the Nissan Primera, Opel/Vauxhall Vectra, Peugeot 406, Toyota Avensis and Volkswagen Passat, is in steep decline.
In 1997, the peak year for the segment recently, mass-market upper-medium models accounted for 16.56 percent of the [13.4-million-unit] European new-car market, according to Nigel Griffiths, auto analyst for Global Insight Automotive in London.
For this year, were expecting it to slide to a 10.88 percent share in a falling market, said Griffiths. Its pretty disastrous, to be honest.
Its been another business challenge that none of us needed, said Earl Hesterberg, Ford of Europe vice president of marketing and sales in Cologne. This is almost a worst case scenario. The segment is down in an industry thats also down.
So what happened?
There are several reasons why the upper-medium segment has fallen short of expectations:
1. Upper-medium customers are defecting from the mainstream brands to premium marques such as BMW, Jaguar, Lexus, Mercedes-Benz, Saab and Volvo. If its got a premium brand on it, even if its a similar size, those are selling like hot cakes the Audi A4, BMW 3 series and Mercedes-Benz C class, said Griffiths. The 3 series is getting to end of its life and its still selling near-record volumes.
2. The compact minivan segment has grown rapidly. Back in 1998, the Renault Scenic was basically the only entrant. With Volkswagen and Ford belatedly launching into the segment this year, virtually all major volume manufacturers will have a compact minivan.
3. Customers are moving downmarket in selected countries. The UKs new company-car tax rules, for example, have driven some business buyers to move from upper- to lower-medium cars such as the Ford Focus, Volkswagen Golf and Opel/Vauxhall Astra. The price entry point [for lower-medium cars and compact minivans] tends to be 10 percent or more below the price range for upper-medium segment cars such as the Mondeo, said Griffiths. Its more for less if youre going for flexibility and space.