Today, we examine rumours in the mainstream car industry that if accurate, could precipitate something quite unusual. Genuine surprise.
In a polarised landscape, the worst place to be is in the centre ground. This is as true of the mainstream motor industry as it is within politics, religion or even retail. Anyone not attempting to create upmarket brand extensions hopes to convince customers to pay more for their existing products. Others see the creation of new brands as the answer.
While the approaches may be different, the goal is the same. To get out of the loss-making cycle they’ve become locked into and join the profit-makers and success stories in the premium lounge.
A recent piece by journalist, Hilton Holloway, Autocar‘s generally well-connected industry correspondent spelled out some of the stark realities facing the European mainstream. Saddled with huge costs and low transaction prices, they face a desperate fate as they struggle to maintain viability, protect market share and raise volume. And with the European market only barely picking itself off the floor, projections give little room for comfort.
But the main thrust of the piece is primarily what I want to focus upon here. According to Holloway’s sources, it’s rumoured that a well known cash-rich Asian mainstream maker has concluded its established brand will never convince customers to pay a premium and are instead considering buying a storied upmarket nameplate, which according to Holloway; “it will re-launch and nurture”.
This of course begs all sorts of questions. One being, is there any credibility to this? Clearly there’s a compelling business case in pushing to a higher price point when margins are practically non-existent. We know the costs of creating a brand from scratch are vast, but we shouldn’t underestimate how expensive it is to breathe life into a dead or dying brand either. The unpalatable truth for any large-scale manufacturer who doesn’t possess an upmarket badge is they are missing out on what is fast becoming the new mainstream.
The other obvious question centres round who this Asian manufacturer is and which marque they have in their sights? A few obvious candidates immediately spring to mind as I’m sure they suggest themselves to you. Because if this strategy gains wider hold, death’s revolving door could end up spinning at vastly increased revolutions. Suddenly, that Hillman revival isn’t so far-fetched – to say nothing about Borgward. But before we get too excited, the track record on reanimation is anything but stellar.
With everyone within the centre ground attempting to locate the emergency exit, there are as many plans as there are protagonists. Who’s got the right idea? The brand extenders? The up-sellers? The creationists? Or will it be the exhumer’s? Because, while this story is great news for enthusiasts of the macabre, it also begs a another question. If there’s enough seats in the premium lounge for everyone, just what is everyone aspiring to exactly?
Just when you thought you’d heard it all, the mid-market machinations are looking ever more Byzantine. Stay tuned.