IMI Magazine

IMI Magazine

Cover Feature - Model Army on the Move

Car buyers throughout Britain are going to be under siege this year from the motor industry’s new model army, which is gathering to unleash a new product campaign of unprecedented intensity and breadth.

Data gathered by EurotaxGlass’s “market intelligence service” points to 76 all-new models arriving in showrooms by the end of the year, 55% up on last year’s pretty hectic sequence of launch operations.

Analysis of the upcoming arrivals shows that while small mainstream and premium cars should account for 19 of the newcomers, there are significant numbers of small and compact MPVs and SUVs, plus coupe/convertibles and roadsters.

Asked if this is not the inevitable outcome of an increasingly bespoke boutique approach to model ranges and filling showrooms, one industry watcher commented: “It could be more a case of an unruly bazaar than a carefully laid out boutique.”

Unruly or not, Alan Cole, editorial consultant for Glass’s Intelligence Unit, views it as a timely counter-attack. “The sheer volume of desirable new models may well give consumers a good reason to buy a new car,” he said. “It should stimulate demand and cushion last year’s levelling off in sales.”

Dr Peter Wells, senior research fellow at Cardiff Business School’s automotive industry research centre, sees the gathering ranks of new models as the consequence of a process which has been underway since the early ‘90s. “The almost universal use of platform sharing, or common technical architecture, has resulted in dramatic proliferation in both the number of core models and their variants. In tandem there has also been a small expansion in the number of brands.”

Wells calculates that between 1994 and last year the fragmentation of niches meant a doubling in model variants, intensifying retailing pressure not least because “obviously sales did not grow to the same extent”. The outcome, he reasons, is “a profound impact on production systems, distribution channels, sales and marketing departments and all the support and service facets of the business”.

Wells continued: “This trend of multiple choice has come against the background of dismantling the nice tidy world of three types of car makers - higher volume mainstream producers, premium specialists and lower-volume rarefied operators - who served essentially different markets, income groups and clienteles.

“There has been a state of flux as the number of global groups has shrunk and generalist manufacturers tried to move into prestige or premium territory (Volkswagen in particular) and the prestige brands went in the other direction, while trying to keep their brand integrities intact.”

VW’s plutocratic Phaeton and this year’s next generation Passat typify the former move while Mercedes’ A Class, Audi’s A2 and BMW’s 1 Series illustrate the latter migration.

Germany’s premium trio have cut a swathe through the UK’s traditional fleet repmobile D sector territory, encouraging Vauxhall (via Opel) to diversify into the Vectra’s Signum counterpart as Ford plans an estate/MPV/SUV crossover Mondeo option.

Brand dilution, or confusion, says Wells, is the main strategic hazard as “specialist producers become medium volume players with the danger of compromising their public brand perception and differentiation”. This diversity also threatens to change the retailing environment as brands strive to move up or down and the variety of products to be dealt with multiplies, Wells maintains.

Catering for a new clientele, whether with more rarefied or populist tastes, requires attitude changes while additional unit volume from larger numbers of smaller cars puts pressure on stocking, display, servicing and parts.

Reversing that logic, General Motors Europe has woken up to the fact that any hopes of establishing Cadillac as a European premium player dictates standalone bespoke operations, hence hiring Pendragon as the sole UK sales channel.

Bob Lutz, GM’s vice chairman of product development, is refreshingly candid when he admits that Cadillac owners would not be enamoured with the prospect of standing in line behind five or six Astra owners as they book their £30,000 to £40,000 Cadillacs in for a service.

“Everyone wants a bit of every additional slice of the cake. It makes for an increasingly congested market and structural changes are inevitable. That leads to internal friction as demonstrated by the VW Group and even cannibalisation within individual brand ranges,” says Wells.

Glass’s Alan Cole illustrates the point with the new VW Golf Plus, due in June. With its higher roof line and variable format interior, it seems destined to trip over its “conventional” five-door hatchback counterpart, the Touran compact MPV and an estate version.

Wells presumes VW has applied the commercial calculation that a new model will generate more incremental sales than substitutional business within its own corporate brand family.

Having large enough showrooms in which to display the variants and options can lead to stress between car makers and their retailers. Moves towards larger company-owned emporiums and “experience centres” reflect that conflict.

Equally, Wells argues that the next multiple-choice challenge will come in the form of additional technological options. He explains: “It will not just be a choice between petrol and diesel, or manual or automatic, but also the merits of hybrids, which Toyota’s Prius (European Car of the Year) has addressed.

The Lexus RX400h SUV hybrid arrives in March and customers may face dilemmas like choosing between an aluminium-framed car or one with a steel body with plastic panels. Selling cars is becoming an ever more difficult communication challenge.”

This year’s proliferation of small cars is partially down to a European Commission voluntary code, which should cut average company fleet CO2 emissions to 140 milligrams per kilometre by 2008 and 120mg/km four years later. That is instrumental in the Czech Republic joint venture between PSA and Toyota which has spawned Citroen’s C1, Peugeot’s 107 and Toyota’s Aygo, the French duo looking disappointingly “cloned”.

In the domestic UK environment, fragmentation of model sectors, and niches within niches, may bewilder some consumers, but is seen by Cole as a particular positive within the resilient fleet and corporate sector.

More liberal choice lists, cash-for-car options, and the increase in user-choosers means that a significant percentage of the wide spectrum of ‘05 models will end up in the hands of corporate drivers. Standard issue is no longer an option.

Brand new – and not so new

The array of new cars entering the market this year also heralds the revisiting or resurrection of three brands.

Arguably, the most significant is Dacia, Renault’s Rumanian-based ‘value’ manufacturer that is planning to produce right hand drive versions of the Logan in India, hence British imports. With its Modus running gear, plus Megane components, it should exorcise memories of those Dacia Dusters and Denims, which were based on the Renault 12.

Across emerging markets, the Logan, in 1.4-litre petrol saloon form, met its e5,000 (£3,400) target price. Even with UK specification ABS, airbags and power steering, that would only climb to £5,100.

Renault UK strategists are mulling over whether Logan, with incremental models coming, should occupy corners in Renault outlets, or justify a bolt-on franchise.

Cadillac has already laid out its stall with a consciously upmarket network run by Trevor Finn’s Pendragon organisation, although right-hand-drive and diesel models are initially thin on the ground.

Fellow American Dodge is due to join Chrysler and Jeep stablemates towards the end of this year and its mainstream offerings should include a version of Chrysler Group’s replacement for the lacklustre Neon.

The most rarefied debutante must be Bugatti’s Veyron, although whether this unicorn of a car ever comes to market remains questionable.

Other significant minority products include Aston Martin’s new V8 Vantage, a model which will push Ford’s most exclusive brand up to 5,000 units a year and take on Porsche’s 911 in the £70,000 plus bracket.

BMW’s spectrum of choice will widen with four-door saloon and three-door hatchback variations on the 1 Series theme.

Intriguingly, EurotaxGlass’s research claims to have unearthed the PSA Group’s first SUV in the form of a Citroen C4-based 4x4. If it does materialise in September it will pre-empt Renault’s planned equivalent, to be built by its South Korean Samsung affiliate.

Fiat’s attempt to re-enter the upper medium sector is described internally as “the large” rather than barge. Those who have seen the vehicle say it resembles Mitsubishi’s Grandis, with an elegant tear drop shape.

A “monospace/saloon crossover” was one description of a vehicle, which Fiat appears keen to sell into European taxi fleets. Not an ideal route to strong UK residual values.

VW finds a future in the past as it finally rolls out the retro-styled latter-day Microbus, presumably with an optional dayglo orange paint job.

But it’s the small car sector that will see the most frenetic activity, with 19 new additions billed. Sourced from the joint venture Czech Republic operation will be Citroen’s C1, Peugeot’s 107 and Toyota’s Aygo, all appearing at the Geneva show.

Chevrolet (nee Daewoo) has the new Matiz, Fiat a Punto replacement, and Kia a new Rio, while also in the cluttered frame are Mercedes’ A Class with convertible and coupe options, Peugeot’s sliding door 1007 and its 207 replacement for the 206.

Suzuki chimes in with a new Swift and replacement Ignis, while VW’s small car contribution is the Brazilian-built Fox and its pretend jacked up SUV Crossfox counterpart.

Lower medium, rather than small, is Volvo’s V30 hatchback, (its answer to BMW’s 1 Series), Audi’s A3 and VW’s vulnerable Golf.

Projecting into 2006, Britain’s car dealers should have a relatively tranquil time. At the last count, EurotaxGlass had a mere 66 new cars on its incoming radar.