With recent reports suggesting the sector is stagnating, have Alfa Romeo and Jaguar left it too late to prosper in a compact premium market now utterly dominated by the German big three?
The German premium trio’s stranglehold on the European compact saloon segment is virtually complete, with car sales data for Jan-Sept revealing just how dominant Audi, BMW and Mercedes-Benz have become. This is an exclusive club comprising eight models – seven if you combine Volvo’s saloon and estate offerings. The combined sector posted January-September sales of 397,134, of which a sobering 341,339 consisted of either Audi, BMW or Mercedes. That’s 86% of the market, since you asked.
I’ve prepared a table showing 2015 volumes against the same period last year. The breakdown by model looks something like this:*
On the face of it, the C-Class’ upswing vindicates Daimler’s styling direction – the new model’s expressive appearance clearly resonating with customers. Nevertheless, it’s worth reminding ourselves the 3-Series was facelifted earlier this year, so customers may have held back to await the refreshed model. Similarly Audi was running out the previous generation A4 before the new model became available.
But more to the point, Mercedes retailers have been offering aggressive lease deals to business and private customers throughout the year. Some might call this buying market share; something one would imagine beneath the mighty Stuttgart-Untertürkheim leviathan, but if you’re going to look that cheap, you may as well act the part.
Beyond the top three, the numbers fall off a cliff – the remaining contenders slugging it out over an increasingly arid patch of ground. What’s interesting here is the vast gulf volume-wise between Volvo’s S60 saloon and V60 estate; the latter proving over four times as popular with customers than the saloon. Nice to see Volvo holding true to their heritage, even if the V60 bears scant resemblance to most people’s notion of a traditional Volvo estate. These volumes really do call into question the viability of a Volvo saloon in this category – in the EU at least.
Lexus’ 24% loss appears to be Infiniti’s gain, both marques cancelling each other out, pegged at volumes unlikely to trouble the German trio – or the European duo above them for that matter. However, should sales momentum throughout Europe begin to shift towards hybrids – especially in the wake of the VW scandal, they both could be well placed to capitalise.
It’s really too soon to comment much on brand-Jaguar’s performance – the XE only posting sales from March of this year. Availability appears to be more of a factor than demand at present, the acid test for JLR being where XE finishes in 2016. Nevertheless, analysts appear satisfied with early sales for Jaguar’s new contender.
But for JLR and (should the Giulia see the light of day) FCA, the challenge lies not so much in carving a niche for themselves in the lower reaches of the segment, but in making any significant inroads into the top four. Given the fact that Volvo; despite fielding a dated model, sells almost four times as many cars in Europe than Jaguar, says volumes about the task the leaping cat faces.
If anything, the mountain Alfa Romeo faces looks more precipitous still. With Giulia now delayed until (most likely) mid-2016 at the earliest, volumes for the coming year will be of little consequence – especially if the standard models are held back further.
JLR at least are up and running – the XE already on sale on the back of decent reviews and a respected sales/service infrastructure. But Jaguar’s sales gains can only come at the expense of their bottom-end rivals unless they can convince significant numbers of customers from the German trio to defect.
JLR’s European head, Bob Grace told Automotive News in September; “I think there’s still opportunity for modest growth, but I don’t think there will be substantial growth. We just want to carve out a niche for ourselves.” How big a niche? Certainly, much less than 25,000 cars a year would have to be viewed as failure. But with analysts predicting best case sales of 22,000 per annum for the Giulia, is there room for both Jaguar and Alfa Romeo in what analysts now believe is a stagnant pool?
With the sector as a whole posting a modest 7% increase in the year to September, it remains to be seen whether it will show any significant growth for the year as a whole. The advent of two significant new models to the segment of course, could precipitate a spurt of growth, allowing both new cars space to make their mark, but with industry soothsayers predicting ultimate contraction in the coming years as upmarket SUV’s and crossover models become ever more popular across Europe, the chances of success for the sector’s new entrants looks problematic at best.
For FCA however, they look worse than that – facing the prospect of a fight to the death with a better prepared JLR for the scraps the German trio let fall. Better late than never, the old saying goes, but delaying that Giulia is increasingly looking like costing them dear.