Automotive News Europe - January 19, 2009 - 3

January 19, 2009 www.autonewseurope.com · PAGE 3 Incentives war gets messy Renault sales boss says some rivals using ‘brutal’ methods to drive down inventories John Revill Automotive News Europe Automakers are split on whether to fight the downturn in unit sales by offering more incentives on the models during 2009. Some are slashing prices to help dealers clear their inventories while others are offering financing as low as 0 percent or including high-end features at no extra cost. They are doing this to protect sales in a European market that is forecast to fall 20 percent to 10.7 million units in 2009, according to a report from investment bankers Goldman Sachs. ally re-sell and would suffer greater losses if the cars they bought had been heavily discounted. Despite the potential backlash from using incentives, General Motors Europe President CarlPeter Forster told Automotive News Europe last November that incentives are needed in the current downturn. “You have to give incentives to people who are not inclined to buy a car right now. It is more important now because of the economic situation.” But he was concerned about the effect the promotions will have on the business. “Everyone is doing this, but where do you stop?” said Forster. “Hopefully we all try not to kill each other even more.” In Spain, where the market suffered its worst ever sales drop in 2008, GM Europe’s Opel brand has cut prices by 34 percent on some models. The idea is to help clear dealer inventories in a country where sales fell by 28.1 percent in 2008 according to ACEA, the European automakers association. Brent Dewar, GM Europe’s head of sales, marketing and aftersales, said the focus of GM’s sales campaign was on individual offers in each country. “In Spain the market is really tough, other carmakers are going to continue using these absolutely brutal methods to drive down their own inventories,” Blain said. He said it will be “up “Everyone is [using incentives], to us to react with intelbut where do you stop? ligence, while preservHopefully we all try not to kill ing cash flow, which is the primary objective.” each other even more.” Peugeot brand boss Jean-Philippe Collin Carl-Peter Forster, said the French carGM Europe president maker will continue using sales incentives and discounts launched so we are focusing on affordability,” during the last months of 2008. Premium manufacturers are also Dewar said earlier this month. In Germany, Opel is offering op- using incentives to manage stock levtions and financing that give the cus- els at their dealers. Jaguar Land Rover CEO David tomer a ¤2,925 price advantage. The automaker is linking the deal with a Smith said JLR quickly reduced procampaign to mark the 110th anniver- duction when demand started to decline late last year, “but even then sary of Opel. Dewar said: “The focus is not on in- we’re having to run incentives in all centives, we want to be competitive markets. It’s expensive.” Others are trying to resist the urge but also responsible.” to offer incentives. Lower down payment Toyota said it was not part of its strategy to develop aggressive disHe said GM would also help cus- count campaigns to preserve sales tomers by asking for a lower down and market share. payment and charging lower interest “Discount campaigns will always rates. have an impact on profits,” a At Renault, continuation of the spokesman said. “Toyota aims to decompany’s incentive schemes in velop its business in a profitable and 2009 will depend on both market sustainable way, with a long-term conditions and competitors’ behav- perspective.” ior, said the automaker’s head of Lawrence J. Speer, Tony Lewin and sales, Patrick Blain. Bettina Mayer contributed “The real question is whether the News digest Peugeot 3008 to target Tiguan, Kuga PARIS Peugeot has unveiled its new 3008 crossover, (above) which will have its public debut at the Geneva auto show in March. The SUV-styled model will go on sale in Europe starting this summer. Peugeot is positioning the 3008 against cars such as the Volkswagen Tiguan, Ford Kuga and Nissan Qashqai. The 3008 will be priced “competitively” with these and other cars in its target area, Bernd Schantz, Peugeot’s vice president for international sales, told Automotive News Europe. Peugeot showed the 3008 to journalists at an event in Paris last week. The car included luxury options such as a dashboardmounted satellite navigation system and a panoramic glass roof. The 3008 strongly resembles the Prologue concept shown at the Paris auto show last October. Lawrence J. Speer Image damage But others are holding back because using deep discounts and other incentives to sell new cars lowers the value of those models in the second-hand market. Peter Cooke, of University of Buckingham in the UK, said long-term incentive campaigns also damage a brand’s image. The professor of automotive management said consumers get used to the discounts and expect them to continue. Fleet sales are particularly sensitive to declines in residual values because companies have more cars to eventu- GM, unions reach deal on production cuts New Renault Spain boss faces tough task Lawrence J. Speer Automotive News Europe Serious slump Sources say the VW roadster concept will go into production if Porsche and Audi want derivatives of the car. The three carmakers already build SUVs together. VW needs two partners to get OK on roadster Production viability of sports car could depend on interest by other brands Luca Ciferri Automotive News Europe DETROIT The roadster concept Volkswagen debuted at the auto show here last week will be built, if Porsche and Audi want it too. “To make a strong business case for the new roadster, we need to share the investment with at least three brands,” a senior VW group executive told Automotive News Europe. Audi already has designed its variant of the new roadster, a second VW source said. He added that Porsche wants to add a car to its lineup that will lower the entry price for the brand and reduce the carmaker’s overall CO2 emissions. The lowestpriced Porsche is the Boxster, which starts at ¤45,300 in Germany. The roadster is expected to start at about ¤30,000, which the source said would make it too expensive to become a variant for VW group automakers Skoda and Seat. When asked by ANE at an event in Munich last week whether Porsche has any interest in the roadster, CEO Wendelin Wiedeking said he could not comment on future product plans. VW, Audi and Porsche already have a three-way agreement for premium SUVs. The VW Touareg, Audi Q7 and Porsche Cayenne share the same platform. Within two months, VW is expected to announce whether it will make the roadster. A production-ready version of the car, called the Concept BlueSport, debuted in Detroit with a 180hp diesel engine linked to a sixspeed dual-clutch transmission. Bettina Mayer contributed Sales in Spain dropped dramatically PARIS Things are not going to be last year for the country’s top-selling easy for Jean-Pierre Laurent, who automakers took over Renault’s troubled Spanish 2008 %chg vs. 2007 subsidiary January 1. 1. Ford 106,403 -23.9 Spain is the European market 2. Peugeot 102,882 -21.6 hardest hit by the global economic 3. Citroen 102,266 -33.8 slowdown. 4. Seat 102,125 -27.1 New-car sales dropped 28.1 percent to just 1.16 million units last 5. Renault 101,299 -30.8 year, well below the 1.61 million units Source: ANFAC sold in 2007, according to ANFAC, the Spanish carmakers association. Manufacturing has been similarly The French carmaker projects the affected, with carmakers stopping production at their Spanish factories Spanish market will contract by an for multiple weeks at the end of last additional 15 percent to 20 percent in year. Temporary shutdowns will con- 2009, which would drop it below the 1 million unit mark for the first time tinue this year. Production in Spain’s export-ori- since the mid-1990s. New-car orders during the first 10 ented manufacturing sector was days of January were down by more than 10 down 40 percent when percent in 2008. With compared with the equity analysts expecting same period of 2008, European markets to Laurent said. drop by an additional 10 “It is going to be a percent to 20 percent this very difficult year for year, the outlook is even every brand,” Laurent worse for Spain’s 18 autosaid. motive plants in 2009. Renault is among Laurent, 54, took over those hardest hit by any responsibility for Reslowdown in Spain, nault’s Spanish sales “It is going to be a which contributes 10and production activities very difficult year 15 percent of its Eurofrom Juan Antonio Ferfor every brand.” pean sales. nandez de Sevilla, who reJean-Pierre Laurent, The sales decline tired after 26 years with Renault Spain CEO pushed Renault down the French carmaker. to the No. 5 position on He knows turning the list of sales leaders around performance in in Spain. (See table) Spain will be difficult. In 2008, Spain was Renault’s “When the automotive sector suffers, all of Spain suffers, so this is a third-biggest market, behind France very depressed market today,” Lau- and Germany. This was despite the 30.8 percent rent told Automotive News Europe in a phone interview from Madrid. drop in sales, to 101,299 cars. ANE General Motors Europe and its union have agreed on a plan to reduce working hours at its factories across Europe. Under the agreement, employees who have their working hours cut will receive a percentage of their full salaries from their local or national governments. Klaus Franz, chairman of GM’s European union, said: “It is particularly important that during the time of the agreement the management rules out layoffs and plant closures in all of Europe.” GM has cut its European work force by about a fifth over the past four years. Half of the 12,000 job cuts came at its German unit Opel, which in December 2008 was the first European automaker to seek a government bailout. John Revill Photo: Luca

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Automotive News Europe - January 19, 2009

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