by Frank Beeton
auto alert
A probing review
of significant global
motor industry news
Ford Moving Upmarket in
Europe – Will it Work?
Car manufacturers supplying the
European market, which shrank from
16 million units in 2007, down to 11,9
million units in 2013, have been facing
a number of consequential problems,
not least of which has been a lack of
profitability. In recent columns we have
alluded to related issues facing the likes
of PSA Peugeot-Citroen, who recently
entered a partnership with Chinese
manufacturer Dongfeng to counter the
impact of depressed European sales, and
General Motors removing its Chevrolet
brand from Europe to allow subsidiary
Opel some breathing space. Ford, despite
a market share improvement in the first
four months of 2014, has reportedly not
made a profit in Europe since 2010, and
is now proposing a new strategy to turn
this situation around. This involves an
upmarket move using the Vignale brand,
which first came into Ford ownership
through de Tomaso in 1969 (Vignale
was originally an Italian automobile
coachbuilder).
The Vignale label is to be added to higherend versions of mass-market models,
such as the Mondeo and S-MAX MPV,
together with leather interiors, chrome
mouldings and enhanced customer
service packages. The higher prices that
will be charged for these models will,
hopefully, result in higher average margins
across Ford’s range. The manufacturer
cites conquest sales that it has already
made with its S-MAX against the likes of
BMW, Audi and Mercedes as justification
for believing that it can achieve similar
results with enhanced versions of other
mainstream products. In some respects,
this can also be seen as a measure of
retaliation against downmarket moves
by these luxury brands with models
such as the Audi A1, BMW 1-series, and
Mercedes-Benz A Class.
Industry analysts are not totally
convinced that this strategy will work,
however. In South Africa, we have
seen most “volume” car makes drift
out of direct competition with the
German luxury brands, to concentrate
more on their smaller car models and
SUV’s. Some readers will remember
1980’s upmarket cars such as the Opel
Senator and Ford Grenada Ghia, which,
although extremely competent products
in their own right, were unable to
establish satisfactory market footholds
against luxury brand competition, and
were subsequently dropped.
Even Toyota and Nissan, whose
Cressidas, Camrys, Skylines and
Maximas enjoyed some local support,
eventually withdrew their “parent
brands” from participation in the
upper reaches of the local car market.
It seems that buyers, when they can
afford to move upmarket, forget their
past loyalties, and opt for a “badge” to
confirm their elevated status.
Globally, BMW, Audi and MercedesBenz vie for leadership of the “luxury”
market. Audi has proved that its parent,
Volkswagen, can compete in this
company, but only by establishing,
and promoting a completely different
badge, with no VW linkage visible on
the products. Toyota has gone a similar
route with Lexus, and is comfortably
ahead of its two equivalent Japanese
rivals Infiniti (Nissan) and Acura (Honda)
in this particular race. Ford had an
earlier presence in this class through
ownership of Volvo and Jaguar, but
gave them up as part of its ultimately
very successful “One Ford” global
strategy. It still has Lincoln, which is
mainly restricted to North America
and the Middle East, so its potential
to achieve its upmarket objectives in
E urope with Vignale badged Mondeos
and S-MAX SUV’s is very much open
for discussion.
| words in action
20
july 2014
Some Recall Facts
Some readers may be of the opinion
that our rant against rapidly advancing
technology in last month’s column was
a bit over the top. As we pointed out,
we are not aware of any global source
which provides consolidated information
on the frequency or extent of product
recalls, but the perception created by the
almost daily reports of these events has
left us with the distinct impression that
the problem is getting worse. However,
General Motors has now published a list
of recalls that it has conducted in North
America during the first two quarters of
2014, and it makes for very interesting
reading, indeed!
The total number of vehicles affected by
the twenty-nine recorded events totals
just more than 15,8 million units! The
biggest single recall in terms of vehicles
affected was not the notorious “ignition
key” event that has recently drawn so
much attention from the media and the
US Congress, but a brake lamp recall on
Chevrolet Malibu, Malibu Maxx, Pontiac
G6 and Saturn Astras, ranging in vintage
from 2004 to 2012, that involved no fewer
than 2,7 million units. At the other end
of the scale, a recall of 2015 (!) model
Chevrolet Silverado HD and GMC Sierra
HD pickups for rectification of a loose
fuse block involved only 58 units. The
average number of affected individual
vehicles per recall across the 29 reported
events was 545 167 units.
This is not to suggest that GM is unique
in respect of recall severity or frequency,
and it is to the company’s great credit
that it has made this detailed information
available. Clearly, countries that have
strict regulatory controls over the
reporting of recalls, such as the United
States, will tend to be more in the media
spotlight, and we have noted that the
number of recalls reported to the National