European automobile market: Beware of taking on the Germans

Major automobile companies are making a big mistake in thinking they can increase profit margins by taking on German automakers (BAMXY.PK, VLKAY.PK, DDAIF.PK) in the luxury market on their home turf, argues Neil Winston of The Detroit News.

The "delusional" strategy to invest in the high-end market - instead of slashing capacity and following the lead of the successful South Korean automakers (KIMTF.PK, HYMLF.PK) in Europe - has proven disastrous to automakers such as Saab, Renault (RNSDF.PK), and Volvo (VLKAY.PK) in the past.

Peugeot (GM, PEUGF.PK) and Ford (F) are guilty of falling for the temptation to move more models into the European upscale market, while Fiat (FIATY.PK) is playing small ball on the continent.

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Comments (15)
  • rcpatrick5443
    , contributor
    Comments (909) | Send Message
    What are Neil Winston's credentials for making this pompous statement? And what's with the weird phrase, "guilty of falling for the temptation to move more models into the European upscale market?"
    Is this from The Onion?
    12 Oct 2013, 10:49 AM Reply Like
  • Tdot
    , contributor
    Comments (9372) | Send Message
    Well, he's obviously a BMW fan, maybe of Bavarian descent, and therefore an expert on all things automotive. Either that or he is one of God's "special little people", that we smile and wink at while nodding with love and sympathy.


    Peugeot is already a European brand with a long history, so that is just an utterly ignorant observation, which leans us towards "special people", bless his little heart.


    Meanwhile Ford is very, very well established in Europe as both a value brand in small cars, as a sports brand with the upgraded RS series small cars (similar to the ST upgrades in the States), and as a premium brand with the global Mondeo midsize car as a flagship; not to mention a number of value crossovers and premium people-movers in the fleet. Ford is gaining market share in Europe while others continue to falter. That says something.


    Evidently Winston is just plain wrong, with outdated information and no real working knowledge of the European automotive market.


    Granted, BMW and other "home brands" in their respective home markets (and fatherlands) will "always" do relatively well at home, compared to random "outsiders".


    The really amusing part is when Ford outsells a similarly (or lower) priced BMW or Mercedes or something in the same class...
    12 Oct 2013, 11:42 AM Reply Like
  • Peskar
    , contributor
    Comments (41) | Send Message
    Don't forget that in Europe Ford and Opel are regarded as "German" brands.
    12 Oct 2013, 11:54 AM Reply Like
  • Johan Luthor
    , contributor
    Comments (24) | Send Message
    Plain ztupid.
    Peugeot and Citroën are making +70% of their sales of their new models (2008, 308 and C4 Picasso) in the two highest trim level models.
    Europeans are buying fewer cars but paying more for each car. PSA is benefitting from this. Does not have to pretend to be BMW.
    And the new 308 is considered to be as good as the Golf, also by germans.
    12 Oct 2013, 12:45 PM Reply Like
  • jack897
    , contributor
    Comments (269) | Send Message
    I know this is mainly pointing to GM. What is it, this writer is afraid somebody will come out with a better mouse trap? I suppose no other company has the right to infringe onto the German market. It oblivious this is written by a German car lover.
    12 Oct 2013, 01:39 PM Reply Like
  • Left Banker
    , contributor
    Comments (3903) | Send Message
    Anybody commenting above been to Europe recently? Looked at the numbers from there? Or are your opinions based on what you see on the road in Yourtown, USA?


    At the top end, nothing comes close to MB, Audi and BMW any where in Europe. Nothing. And, as the man says, Volvo et al. have learned that lesson the hard way. Ford may compete reasonably well at the low to middle, but at the luxury car level? Just ain't gonna' happen. And do you really think M/Sr/Herr Eurodriver is going to look seriously at a Cadillac?


    Anyone know who's number one in Euro-autosales. Hint: It begins with a V, ends in W, with nothing in between.


    As for Jack's comment: The guy is writing about Europe not St. Paul Minnesota. He may or may not be a German car lover, but for absolute sure Mr. and Mrs. Eurocarbuyer are. Of course ford and gm have the "right" to try to infringe. The point is that they will not succeed.
    12 Oct 2013, 02:40 PM Reply Like
  • Johan Luthor
    , contributor
    Comments (24) | Send Message
    Yes I live in Europe.
    Ford and PSA are not stupid enough to copycat BMW etc.
    PSA is gradually going its own way, for instance with the DS series. All the new models are considered being at the level of, or better than, the VW rivals.
    As for the sales of PSA, wait for Q4 and Q1 2014.
    13 Oct 2013, 02:16 AM Reply Like
  • Remford
    , contributor
    Comments (144) | Send Message
    This is a HUGE misread of what especially Ford is trying to achieve. Absent the critical mass of its own credible luxury brand even at home in North America, its Vignale trim creates the same kind of low-cost high-margin opportunities that require neither new product nor manufacturing capacity which served it so well in right-sizing its North American operations and is precisely the kind of European opportunity it should be pursuing.


    To mistake it for taking on BMW, Mercedes, Audi or other bona fide premium badges would be an utter misread of the entire sector and segment.
    12 Oct 2013, 11:17 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
    Don't be silly.


    Only Americans are gullible enough to buy into Ford's Badge engineering (just like GM in the 1980's)


    Real luxury cars have longitudinally mounted engines, RWD, and independent rear suspension.


    Ford does not make any (Even Falcon Australia about to be axed)


    No German would buy such a rebadged Ford Fusion (4cyl/FWD) rebadged as a Lincoln or a Vignale.


    Vignale along with Lincoln shows how desperate Ford is.


    Luxury brands globally may only make of 20% of sales, but they result in 60% of the profits.


    Ford does not build any luxury cars.
    13 Oct 2013, 11:35 PM Reply Like
  • Klaus Müller
    , contributor
    Comments (7) | Send Message
    Have to agree with 1980xls. I'm never going to buy a Ford in my life, the quality of the MB and the top notch service the dealer provides me is unique.
    18 Oct 2013, 07:06 AM Reply Like
  • hak2433
    , contributor
    Comments (5) | Send Message
    Re: Tdot
    Are you saying that Cadillac and Lincoln, in our Fatherland the USA, are out selling the 3 Germans... Audi, BMW and Mercedes? If someone here in the USA or for that matter world wide wants to make a statement about his/her wealth he buys one of the 3 Germans. They are desirable not only here in the USA but World wide.
    13 Oct 2013, 09:18 AM Reply Like
  • cbroncos
    , contributor
    Comments (3023) | Send Message
    You need to re-read Tdot's comment before you comment yourself. I did and nowhere do I see Lincoln or the USA mentioned.


    So what are you driving at?
    13 Oct 2013, 10:22 AM Reply Like
  • Tdot
    , contributor
    Comments (9372) | Send Message
    hak - no - I'm saying that, as an example, Das Chermanvolkss in Das Deutschland und AllofChermany tend to strongly favor Das ChermanDeutscheBrands, and that "outsiders" from the US, and those AutoBrands from elsewhere in Europe outside of DasVaterland (Papers please?) are practically Verboten. Nevermind DasAsians.


    As it turns out though, Ford has a well established Product Development Center in Germany (Ford Europe is headquartered in Cologne) with advanced Research and Development in Aachen and production plants in Cologne (Fiesta and the new 1.0L Ecoboost engine), and in Saarlouis (Focus and Ka). Ford's presence in Germany is a little like Toyota's in the US ... except they've been there since the 1920s, even before DasFührer.
    13 Oct 2013, 11:33 AM Reply Like
  • DavidHart
    , contributor
    Comments (41) | Send Message
    Basically, they are saying that Germans, for the most part, buy luxury cars based on popularity, history, and solid engineering and refuse to buy cars based on new features (i.e. electronic parking). There is also an undercurrent of snobbery in the article indicating a bias that US car companies cannot create a good quality competing product.


    I understand this sentiment as US car companies fell behind over the last 10 to 20 years. But, I think that this analysis fails to take into account the recent consistent improvement in quality and workmanship by US automakers.
    13 Oct 2013, 12:18 PM Reply Like
  • Nick Cox
    , contributor
    Comments (1488) | Send Message
    Worldwide,most people sneer at American cars,I'm afraid to say.
    As for taking on the Germans,I live in Singapore,which is the most expensive place in the world to buy a car.Yet the top two brands here are BMW and Mercedes.Around Asia in general,no-one can touch them for buyer desirability.
    In Europe,I think Fiat is well positioned.It's got the profitable luxury brands (Ferrari and Maserati),the mass brand (Fiat) but needs to improve its higher end brand (Alfa Romeo).
    13 Oct 2013, 10:53 PM Reply Like
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