Automotive News Europe - September 2011 - 14

AUTOMOTIVE NEWS EUROPE

MARKETS

RISE & FALL
OLIVE KEOGH
autonewseurope@crain.com

SHIFTING SHARE
VW is leaving rivals behind.
% EU MARKET SHARE H1 2011 H1 2010

In a flat European market, Volkswagen is boosting share as rivals PSA, Renault and Fiat falter
tougher home markets and also ongoing competition both directly from non-premium brands like Hyundai and Kia, and indirectly from premium brands like BMW that are squeezing non-premium market share,” said Jonathon Poskitt, industry analyst with J.D. Power Automotive Forecasting. “The VW marque remains the default choice for many Europeans looking for a good quality vehicle with a strong brand image.” With the exception of Seat, where sales are static, VW Group brands are performing strongly in the depressed market. Audi is enjoying the fruits of a product offensive that has seen the launch of the A1 entry-premium car and of the new A7, plus a refreshed A8 flagship. The brand’s EU sales grew 8.5 percent in the first half. The core VW brand saw a 5.3 percent rise. While Seat’s EU first-half sales rose by less than 1 percent, Skoda enjoyed 7.2 percent growth. “There is nothing magical about what VW does,” said John Wormald, managing partner of automotive strategy consultants, Autopolis. “It is systematic and consistent and has the scale advantage of shared platforms and components.” VW Group brands are best-sellers in many of Europe’s segments (see analysis, pages 101-105). PSA/Peugeot-Citroen, No. 2 by sales volume in Europe, and No. 3 Renault saw their market share fall in the first half. Both automakers’ sales suffered after the

n a flat European market, one automaker stands out as bucking the trend: Volkswagen. Europe’s biggest automaker is now more dominant than ever. In the first half VW Group, which includes the VW, Audi, Seat and Skoda brands, had a 22.7 percent market share in the EU, up from 21 percent the year before, according to industry association ACEA. All of VW’s traditional European rivals lost share, except GM Europe, which saw a slight increase on Opel’s resurgence. There is no single reason why VW is winning market share at the expense of its traditional European rivals, industry watchers say. Success is because of a combination of factors that include a comprehensive model lineup covering a wide range of age groups, sectors and tastes, a strong perception of brand quality by consumers and heavy investment in design, marketing, distribution and dealer development. VW is also a dominant force in its German home market, where its sales were up 10 percent through June. The weak Italian market hurt Fiat and subdued post scrappage-incentive sales in France provided little or no growth for Renault and PSA/PeugeotCitroen. “With a diversified brand and product portfolio, VW has been better equipped than others to deal with pressure, including

VW Group PSA Renault Group GM Ford Fiat Group
Source: ACEA

22.7 13.2 9.7 8.8 8.1 7.3

21.0 13.9 10.6 8.5 8.5 8.2

ending or phasing out of scrappage incentives that had boosted sales of minicars and subcompacts. GM enjoyed a sales resurgence of its Opel brand, but sales of its low-cost Chevrolet models remained static as consumers bought fewer smaller cars as scrappage incentives were phased out. Ford of Europe, whose share fell, has said it will not buy share by getting into an incentives war at the expense of profits. For the first six months, Ford’s EU sales were down 6.6 percent, but Ford of Europe reported a $283 million pre-tax profit. Fiat is down 13.1 percent in the period, and is suffering from a lack of new products after CEO Sergio Marchionne cut investments during the financial crisis. VW’s dominance is set to continue. “VW does not appear to pursue market share at the cost of everything else,” said Paul Newton, an auto analyst with IHS Automotive. “It is not the most competitive on the price/value package if you look at what the Koreans are offering, but VW can charge a premium for its products and buyers still come.” ■

MARCHIONNE’S VIEW OF INDUSTRY: THE PATIENT IS IN ‘INTENSIVE CARE’
JASON STEIN
jstein@crain.com

Without drastic changes to the European automotive business model, overcapacity and protectionist government measures threaten to spin the European industry into another tailspin, predicts Fiat and Chrysler boss Sergio Marchionne. Time is “running out” for European automakers to deal with deep structural problems in the industry (see Rescuing Fiat, page 64). “The auto sector was already sick before the economic crisis forced it into intensive care,” Marchionne told an industry conference in Michigan last month. “The lack of a common vision hampered, and continues to hamper, efforts to address deeply rooted structural problems.” Marchionne’s view is placed in the belief that European member states have followed their own course of action with “some even proSERGIO viding direct aid to domestic automakers,” MARCHIONNE he said. “While the U.S. focused on

restructuring the auto industry to provide it a solid base for the future, in Europe things went in a very different way.” The “interventionist attitude” has put some national players in a more advantageous position than others, “distorting the equilibrium of the European common market and artificially preserving unproductive capacity,” he said. Marchionne has not been alone in his view that Europe has too much capacity. In March at the Geneva motor show, General Motors and Ford Motor Co. executives predicted that overcapacity will continue to slow the pace of restructuring in Europe. Ford estimates the European industry has between 30 and 35 percent more production capacity than it currently needs. Europe has enough plant capacity to build around 24.6 million vehicles a year, but last year produced only 18.7 million, a 76 percent utilization rate, according to IHS Automotive. Said Marchionne: “The industrial and political leadership of Western European countries must jointly find the will and determination to address the uncompetitiveness of the overall system. I have no doubt it will happen. I, unfortunately, just do not know when.” ■

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SEPTEMBER 2011

Automotive News Europe - September 2011

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