Two Fevered Decades – Taking the Temperature of the European Car Market.

Robertas Parazitas looks at the changing shape of the European car market over the last twenty years.  The numbers tell several stories; some are manifestly obvious, others may surprise you.

Source: Opel Media

The right-hand column lists European sales in 2017, highest to lowest.  The numbers to the left tell several stories, many of them unhappy.

The biggest change has been the irresistible rise of the three German premium brands – up 85-91% over the last twenty years. They occupy positions six to eight and, given Ford and PSA’s contentions that profits matter more than volume, could move higher still. Everyone knows this – the evidence is before our very eyes. I’ve taken this fact as read, and concentrated on the non-premium makers, in all their rich and diverse variety.

The choice of 1997 as a starting point is numerically convenient, but turns out to be a significant one. The major Japanese manufacturers’ EU operations were firmly established, though running some way short of maximum capacity.

Premium was still genuinely premium, but the incursion into the mass market was underway. The Audi A3 had arrived in 1996, and Mercedes-Benz would present the A Class in September of the following year.

Source: Skoda Auto

The VAG-era Škoda Octavia had just been launched and VAG were not yet outright owners of Škoda Automobile, but had by 1997 ramped up their stake to around 70%. This might have seemed a peripheral matter twenty years ago, but now Škoda are Europe’s tenth-biggest selling car marque, and hampered only by production capacity from moving several steps further up.

By my reckoning, the manufacturers fit into three discernible categories:

European Mainstream (EM) – long established, European headquartered brands. Ford and GM have been in Europe so long that they are effectively assimilated – to complicate matters further Opel and Vauxhall are European once more.

Japanese Transplant (JT) – Japanese majors manufacturing in Europe at some time during the period (although Mazda’s claim to a European production base is somewhat tenuous)

Challengers (Ch) – Brands of various origins and ages, which existed only on the margins of mainstream sales two to three decades ago.

The first two categories are clearly the “squeezed middle”, the numbers eroded by premium brands above, and the challengers below. Only Volkswagen hold firm, although the Peugeot brand looks relatively constant based on the chosen sampling points.

The order of the top five is the same in 2017 as it was in 1997, although there has been some jockeying for position in the years between. Indeed, the raw figures do not reflect the existential crises faced by a number of the players over the years, particularly at the end of the last decade.

Sales performances can be distorted by such things as the chauvinism of certain domestic markets, and the odd “killer” or “saviour” product. In particular, those who recognised the potential of the MPV and SUV/CUV sectors reaped the rewards of their daring.

Of the five “challengers”, Škoda, Hyundai, and Kia have all but graduated to the mainstream, based on consumer acceptance and pricing.

Source: Renault Media

Dacia remain low-end by choice, and the numbers suggest that they have got things very right. With a limited range based on a single platform, they’re marginally ahead of Kia, who are vaunted as a stellar performer and have far wider market coverage. Dacia profit margins are said to be amongst the best in the industry which is further good news for the world’s biggest car manufacturing alliance.

For the Japanese makers, the cup of woe overflows. Only Nissan, Mazda, and Suzuki beat their 1997 figures last year. The mighty Cashcow and inexplicably popular Puke do the trick for the first, credit is due to the other two for their product-led success.

Source: Suzuki UK

As for the remainder of the Japanese brands, one can only conclude that Europe’s market saturation, near-zero economic growth, and political uncertainty has driven the decision that other territories are better theatres in which to play out their ambitions. This cannot wholly excuse Honda’s collapse to less than 1% of the European car market – something is badly wrong with the European operations of this once-revered carmaker.

Where did it all go wrong? Source: R Parazitas

Honda’s shockingly poor 2017 performance was one figure which had me re-checking the sources. The other one which made me do a double-take was Fiat’s 769,670, behind Peugeot and just ahead of surging Škoda in the non-premium chart.

I have a great fondness for Fiat, but their market coverage is hopeless; they have all but given up on the Punto, and their SUV/crossover offering is limited to the Panda 4×4 and 500X. Somebody must be buying them – if the Lancia White Hen was aggregated into the Fiat numbers they would be no.7, ahead of two of the German premiumists.

And finally let us not forget the fallen of every category. The premium sector has lost Saab, and Lancia sits in a strange state of limbo. The European mainstream’s casualty was Austin, which had assumed the Rover name for its last sixteen years.

Life can be hard for the challengers too. Europe has lost Daewoo / Chevrolet, Chrysler’s mainstream passenger cars, Proton, Perodua, and Daihatsu.

There could be worse to come, and it is the established mainstream manufacturers who have to fight hardest for numbers, position and profitability.

Source: Vauxhall Media

Deals, incentives and “ownership packages” abound. Pre-registration and daily hire placement remain commonplace, keeping the lines running but impairing profitability and residuals.

Can the continent really accommodate over twenty five significant brands and fourteen parent companies manufacturing within its borders?

18 thoughts on “Two Fevered Decades – Taking the Temperature of the European Car Market.”

  1. I recently caught an acquaintance of mine driving about in a brand new Fiesta… Vignale! Obviously, I’d need to enquire about this, which led to some interesting insights: She’d traded her Smart 4-2 in for the Fiesta, at a much better price than any independent dealer had offered to her; her fully-specced Vignale is a showroom car with two figures on the clock; her monthly leasing rate is €80 per month.

    How on Earth does FoE earn a penny on this car?

    1. Funny you should mention the Vignale, Kris. En-route from Heathrow today, I had my first sighting of Brougham-Festie. Shortly after, I sighted a very well preserved Vauxhall Astra D in a delightful beige.

      My cup truly runneth over…

  2. Thanks for your massive research.
    A few points:
    “Deals, incentives and “ownership packages” abound. Pre-registration and daily hire placement remain commonplace, keeping the lines running but impairing profitability and residuals.”
    The trouble is, Robertas, without seeing their full accounting we can’t know anything about the profitability of these deals. This “paper” half of the metal sellers’ transaction is entirely opaque. The only certainty is that it’s a response to huge over-supply.

    Is “Morris” actually Jag? If not, where is Jag — in with the “UK Off-roader”?

    Why not put Lancia in with Fiat, as it’s otherwise left out?

    Honda’s a puzzle: any ideas?

    1. I had to search a little for ‘Morris’, but once found, it’s very obvious of course: Mini. (Sorry, MINI!)
      Didn’t exist (as BMW) in 1997 yet, I guess before it would have been listed as Rover. After that it proved a huge sales success, probably also due to its debatable ‘EM’ status – it’s perceived as (at least semi-)premium like VW, thanks to the image of the halo marques in their groups.

      Jaguar is not on this list, by far. They currently sell around 70’000 vehicles per year, just a bit more than Lancia.

  3. The sales figures show that Toyota approximately doubled their sales between 1997 and 2017. Not bad?
    Ford: whatever they are doing since about 2005 has been not good enough. Surely a decade of mediocre results is enough to show that their model of quite good is not not good enough. Note, they did very well in the era when they had zany styling and fun-to-drive cars. Opel – they really have tried hard and something beside product quality is amiss with that brand. I´d suggest they deal with warranties (make them better) and try putting 2% more content into every single car, as in anything to make them tougher and more durable and for goodness´ sake hire a chassist tuning consultancy and make every car fun to punt around in. Safe and steady is not working on its own.
    Honda: every car they make is nasty to look at. They need to radically simplify their style and let it be known that they are about high quality engineering and credible performance and nothing else. Make them the car for serious drivers (but not necessarily about aggressiveness) and eventually consumer-leaders will cotton on.

    1. That 2007 Toyota figure of just short of a million seems to be almost anomalous. They had no Yaris or Aygo – the Starlet was their supermini offering and was scarcely promoted. The RAV-4, MR2, and Celica were well regarded but were not big-volume sellers.

      I should make it my business to find out what was going on.

    2. Hi Richard, I bought a new Civic Hatchback last July as my daily driver. I never thought I would buy one because, yes, those fake air vents on the bumpers were really excessive. But when I saw it in the flesh, the car impressed me. Proportions are just right, and the rear volume has something rakish to it that I like very much. But what sold me the car were its driving manners. It feels tight, well balanced, no body roll, delightful steering and gearbox, and the three cylinder engine is just impressive.

      As a side note, I drive another car, a 1996 Lancia Y, bought new 22 years ago. Oh, and my previous daily driver was a 1999 5-door Lancia Delta TD, in Verde Plutone.

    3. Hi John: what you say is interesting because you describe a car whose goodness on the road is cancelled by what I consider quite inappropriate styling. Clearly Honda hoped for more customers like you. I think they’ve misjudged. It should be said that apart from some coarse details the shape isn’t bad. But it is not a Civic – it needed another name. For three generations Honda have offered alienating style to a cautious market segment. Now the Civic isn’t even a Civic but quite large, essentially five door family hatch (it’s Accord sized now). Honda have confused their
      The Lancias sound good. Have you seen our Lancia articles?

  4. Very interesting. Nissan surprised me; I thought that they would have done better, but my perspective is probably UK-biased. Like Fiat, they appear to have too few stars in their product ranges, beyond one or two very successful models. It’ll be interesting to see what happens if / when they fully merge with Renault, as now seems likely.

    I think Honda has suffered from sending mixed signals; they’ve moved from very conservative to more dramatic styling and models have popped in and out of their model range at odd intervals, or have reappeared after a gap of many years. It’s hard to tell what their strategy is, in Europe, at least.

    I agree that Hyundai’s and Kia’s successes have been bolstered by long warranties. The eventual move away from internal combustion engines to simpler, more reliable power trains could make providing longer warranties easier / less costly. However, that process will probably take another 20 years. By then, we may be thinking of (surviving) manufacturers as mobility providers, rather than manufacturers / finance providers. I suspect that in the interim, manufacturers’ survival will depend less on Europe and more on markets such as China (trade deals allowing, of course).

  5. This chart proves that Sergio is a farce and leaves a tricky question: how can Skoda fivefold its sales whilst Seat annual volumes are pretty much the same?

    1. Skoda was always allowed to do its thing under VW (practical, high quality, family friendly, value-for money motoring), whereas Seat was supposed to become a ‘Hispanic Alfa’.

    2. The biggest difference is that VW actually wanted Skoda because they had a clear vision of what to do with it. VW didn’t want Seat but more or less had thear arm twisted to buy it so Spain did keep their domestic car maker.
      The ‘Hispanic Alfa’ thing was no more than a mind game as there were never any cars to support it. VW still doesn’t know what to do with Seat as do most potial customers. Small wonder the cars don’t sell.

    3. Perhaps Seat are taking the ‘Hispanic Alfa’ thing a bit too literally and are chasing a downward path?

    4. Skoda have become the bien-pensant middle-class choice. In Britain this was once Renault 12 and 16 territory, then Saab’s, plus a few Golfs, Audi 100s and Hondas.
      As you say, the Civic’s now become bloated, leaving no room for the lovely 3-litre Accord — which was an obvious Kappa rival.

      I must congratulate John on finding a Delta Part Deux. Hope he can tell us what it’s like, as there are so few around.

  6. I’m not sure we can know that much about overall profitability without including commercial vehicles. It might not affect the overall ranking, but Fiat don’t make all that stuff for nothing, and MB sure don’t give their Vaneo away.

  7. Simon – well done working out Morris, although to be strictly accurate the production space is the Pressed Steel site. It was a mischievous reminder that BMC / British Motor Holdings / British Leyland didn’t die – some parts are doing rather well. Combine JLR and MINI and the 452,442 registrations sit below Kia and above SEAT.

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