LONDON – European mass-market brands are fending off attacks from all sides.
Facing an increasingly fragmented market, squeezed margins and more competition, traditional European carmakers are broadening their product range and entering strategic alliances.
Volume brands held 67.1 percent of western European sales in 1990, but by 2000 their share had withered to 62.7 percent, according to research firm Global Insight.
“They will barely reach 60 percent this year,” said Nigel Griffiths, Global Insight’s head of international automotive industry research.
Most of the decline in market share – about 5 points between 1990 and 2004 – was a direct result of European premium brands moving down-market, he said. Last year a point represented 147,000 units.
German automakers led the way – the Mercedes A class and Smart brand; Audi A2 and A3; and BMW with the 1 series and the Mini brand – but others joined in, such as Jaguar with the X-Type and Alfa Romeo with the 156 and 147.
But traditional European volume brands also are being attacked from the bottom of the price ladder, said analysts at the Automotive News Europe Analysts Roundtable here. Budget brands such as Hyundai, Kia, Suzuki and Chevrolet/Daewoo are competing primarily on price. They have claimed a market share of almost 22 percent in recent years.
“Looking at the capacity they are installing and their expansion programs, Asian makers will steal about one point a year for the next four to five years from European middle mass-market brands,” said Adam Jonas, European auto analyst at Morgan Stanley.
Market fragmentation is another new factor volume brands must face.
Niche growth helps Asians
SUV, minivan and other niche vehicle segments have grown tremendously over the last 15 years – from 3.78 percent of western European volume in 1990 to 22.25 percent last year, Global Insight says.
Market fragmentation is a potential problem for established volume carmakers because they lose economies of scale in manufacturing.
But it is an opportunity for some low-ranking Asian brands if they can add incremental volume in Europe using a high-volume pro-duct from another market.
“To have a product in a hot segment like SUVs is more important than the brand itself,” Griffiths said.
SUVs now help to build presence and image in Europe, a clear advantage for automakers such as Hyundai and its subsidiary Kia, he said. Both Korean brands have several SUVs in their product lineups.
Traditional European volume automakers such as France’s PSA/Peugeot-Citroen are fighting back, Jonas said. PSA has entered several strategic alliances, including a joint-venture car assembly plant with Toyota in Kolin, Czech Republic.
All volume carmakers are broadening their lineups. That’s possible because platform-sharing and other cross-brand cooperation is making development and production of new models cheaper than ever.