More Pressure On the Middle Market

Sources such as this,  this, and this and this are painting a sketchy picture of a new midprice brand to sit, lie or crouch between Geely and Volvo.

2016 Geely Emgrand
2016 Geely Emgrand

Good luck to them, we at DTW cynically murmur. The story is not brand new but the launch date of October 20th is. Recent additions to the brandscape include Qoros, Borgward and DS and for two of them things don’t look so rosy. In the last decade China Brilliance had a go selling cars in Europe and that did not end so well. Existing middle market brands are not all thriving: Honda, Mitsubishi and Mazda struggle to support a full range. Rover and Saab have departed this turbulent world. Lancia teeters. Ford and Opel have difficulty with their more expensive vehicles. So, what sort of price bracket are Volvo and Geely going to be aiming for?

According to Volvo’s UK price list, the V40 (“within reach”) begins at £17,833. So, that’s the end of the middle market, as Volvo is positioning itself above that. Kia sell vehicles in the range £8,600 (Picanto) to £28,000 (Sorrento). I would consider Kia a middle market brand at this stage. Vauxhall have a price range starting from £8965 (Viva) to £22,000 for an Insignia Sports Tourer.

Volvo's forthcoming S90 saloon. Image: turbo.fr
Volvo’s forthcoming S90 saloon. Image: turbo.fr

The general view is that such a move is highly risky. ” Lynk & Co will enter a tough Chinese auto market where the car industry has struggled with slowing economic growth since last year. Geely has weathered the slowdown better than most, with sales of its feature-packed cars growing for 16 consecutive months to September. Launching a new car brand can cost hundreds of millions of dollars, if not billions, according to James Chao, Asia-Pacific chief for IHS Markit Automotive,” writes Automotive News. Iran’s Financial Tribune says “The last thing the Chinese automotive world needs is another brand”, said James Chao, Asia-Pacific chief of consultancy IHS Automotive. “The elimination of more brands in China should be the route””.

What kind of car is the new Lynk & Co vehicle? A CUV, is the answer. Here is one that is already finding out how hard life is for new brands:

Qoros 5 Auto Motor und Sport (2)

Author: richard herriott

I like anchovies. I dislike post-war town planning.

3 thoughts on “More Pressure On the Middle Market”

  1. Did they resurrect the Borgward brand? What will they do next, resurrect DKW and Wolseley? At least Lancia is a still (sort-of) existing brand and its former glory is still – in various forms and (mis)interpretations – somewhat alive in living memory. But Borgward? The “wisdom” of marketers surpasses me.

    1. Despite my cynicism, Beiqi Foton Borgward is doing astonishingly well in its third month on the market. 5133 sales for the BX7, a generously sized SUV rather too similar to the Audi Q5. Realistic pricing helps. Qoros (a Chery / Israel Corp JV) failed to appreciate that the market wouldn’t pay 10-15% more than VW/Ford/Buick money for a neat, safe, but technically backward saloon and hatch. They shifted 2616 cars last month, possibly their best performance since sales started in January 2014.

      The value of a brand name is called into question by SAIC’s two British ‘ghouls’. Roewe, founded on MG Rover IP, without the brand name. managed 27,301 sales, over half of these the new RX5 SUV. MG (acquired by Nanjing Auto using MG Rover tooling and a brand name MGR had rights to, subsumed before much happened by SAIC) sold 8017. Again the best seller is a recently introduced SUV, the GS, which accounts for more than half of the sales.

      So what price a nameplate? The SAIC experience suggests pretty much zero. Then along come BAIC, cash-rich, but uninspiring in their products to date, and puts in an impressive performance by exhuming a German carmaker which made its last car 53 years ago.

      The mistake we all make is expecting logic…

  2. Furthermore, I have to remind here that, due to the prevalent economic lysenkoism, the middle market is shrinking simply because the middle class itself is being pushed to extinction by the deadbeats in power.

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