4LT GS RoadsterFrankfurt Motor Show: Small and efficient is in, and big and wasteful is out in Europe
BMW has revealed a variety of hybrid technology models, like the sporty
diesel-electric Vision EfficientDynamics concept, in Frankfurt
Frankfurt, Germany -- Europe may be home to the world's biggest and oldest premium car brands, but its inhabitants are rethinking their notions of luxury in a way that presents challenges to Europe's automakers.
Ostentatious displays of wealth and big, gas-guzzling sedans are increasingly frowned upon, especially here in Germany, the birthplace of the first guzzlers. Throughout the Continent and Britain, new taxes on motorists penalize big and heavy vehicles, while "cash for clunkers" programs have steered shoppers to small, fuel-efficient cars.
Of 1.2 million vehicles sold in Germany with the help of scrappage incentives -- the European version of "cash for clunkers" -- just 20,000 were BMWs, said Ian Robertson, sales chief for the Munich automaker.
In an unusual shift, luxury carmakers have suffered as much or more in this downturn than mainstream automakers in Europe and the United States.
"This is the first recession that hit the rich," said Stephen Odell, chief executive of Ford Motor Co.'s Volvo Car Corp.
At the Frankfurt Motor Show, luxury carmakers with their big, shiny hybrids appeared to be catching up with trends rather than setting them. France's Renault SA, known best for its small cars, showed a lineup of four zero-emission, all-electric vehicles and pledged to put them on the market by 2012. Volkswagen AG, which also sells small cars primarily, unveiled cutting-edge fuel-saving technologies alongside fabulous luxury models.
In the first half of the year, Ford's middle-market Ford of Europe business fared much better than the luxury brands the automaker shed recently. Ford of Europe sales were down 5.2 percent in Europe, while Jaguar sales fell 26.5 percent and Land Rover's were 44.5 percent lower. Ford sold Jaguar and Land Rover to India's Tata Motors last year.
Germany's luxury carmakers dismissed the notion that they are endangered by a profound shift from luxury and overt shows of wealth. The falling demand was substantial, but the recovery will be substantial as well, said Daimler AG Chief Executive Dieter Zetsche. "Premium markets will see an earlier and slightly steeper recovery, globally."
But the global distribution of luxury car sales may be different. "The Chinese market will be bigger, Europe will see a lesser share," Zetsche said.
Some customers will still want a spacious, comfortable model but will not want to be perceived as "dinosaurs." The Mercedes-Benz S500, a plug-in hybrid unveiled at the show, targets them.
Most auto executives and analysts agree that luxury car sales will rebound. But they worry that the trends that emerged during the downturn will continue to pressure luxury automakers by eroding the profit margins of more than 10 percent that they generated, easily double the profitability of mainstream automakers.
"I don't see those golden times coming back," said Jürgen Pieper, an auto analyst at Bankhaus Metzlerin Frankfurt.
He thinks luxury carmakers will need to spend more on research and development while their revenue will be undercut by a shift in demand toward smaller premium cars. In Europe, small luxury cars such as the Mercedes C-Class and BMW 3 Series are now the largest premium car segment.
Renault, which tried for years to break into the premium car markets, no longer sees it as an objective worth pursuing. "We're seeing people who could buy costly cars look for something simple," said Patrick Pelata, Renault's No. 2 executive after CEO Carlos Ghosn.
Renault executives are astounded by the success of its no-frills Dacia Logan vehicles in Germany. Renault bought the Romanian carmaker Dacia in the 1990s to make vehicles for the least affluent Eastern European and central Asian markets. Germany was not in Renault's sights.
But Renault's dealers in Germany say they are increasingly hearing customers say that they don't want to "over-consume," and they don't want to waste their own money or the planet's resources.
Executives say the trends are taking hold in North America, too, and will influence other markets, but not as deeply. In China, all the major luxury brands reported double-digit growth through July this year, according to Bank of America-Merrill Lynch.
BMW, which had a hall to itself at the show, revealed a variety of models featuring hybrid technologies, the sporty diesel-electric Vision EfficientDynamics concept, the BMW ActiveHybrid 7 and ActiveHybrid X6. "This environmental message is going to play a stronger role in all car markets," sales chief Robertson said. "The U.S. is no exception."
Article
BMW has revealed a variety of hybrid technology models, like the sporty
diesel-electric Vision EfficientDynamics concept, in Frankfurt
Frankfurt, Germany -- Europe may be home to the world's biggest and oldest premium car brands, but its inhabitants are rethinking their notions of luxury in a way that presents challenges to Europe's automakers.
Ostentatious displays of wealth and big, gas-guzzling sedans are increasingly frowned upon, especially here in Germany, the birthplace of the first guzzlers. Throughout the Continent and Britain, new taxes on motorists penalize big and heavy vehicles, while "cash for clunkers" programs have steered shoppers to small, fuel-efficient cars.
Of 1.2 million vehicles sold in Germany with the help of scrappage incentives -- the European version of "cash for clunkers" -- just 20,000 were BMWs, said Ian Robertson, sales chief for the Munich automaker.
In an unusual shift, luxury carmakers have suffered as much or more in this downturn than mainstream automakers in Europe and the United States.
"This is the first recession that hit the rich," said Stephen Odell, chief executive of Ford Motor Co.'s Volvo Car Corp.
At the Frankfurt Motor Show, luxury carmakers with their big, shiny hybrids appeared to be catching up with trends rather than setting them. France's Renault SA, known best for its small cars, showed a lineup of four zero-emission, all-electric vehicles and pledged to put them on the market by 2012. Volkswagen AG, which also sells small cars primarily, unveiled cutting-edge fuel-saving technologies alongside fabulous luxury models.
In the first half of the year, Ford's middle-market Ford of Europe business fared much better than the luxury brands the automaker shed recently. Ford of Europe sales were down 5.2 percent in Europe, while Jaguar sales fell 26.5 percent and Land Rover's were 44.5 percent lower. Ford sold Jaguar and Land Rover to India's Tata Motors last year.
Germany's luxury carmakers dismissed the notion that they are endangered by a profound shift from luxury and overt shows of wealth. The falling demand was substantial, but the recovery will be substantial as well, said Daimler AG Chief Executive Dieter Zetsche. "Premium markets will see an earlier and slightly steeper recovery, globally."
But the global distribution of luxury car sales may be different. "The Chinese market will be bigger, Europe will see a lesser share," Zetsche said.
Some customers will still want a spacious, comfortable model but will not want to be perceived as "dinosaurs." The Mercedes-Benz S500, a plug-in hybrid unveiled at the show, targets them.
Most auto executives and analysts agree that luxury car sales will rebound. But they worry that the trends that emerged during the downturn will continue to pressure luxury automakers by eroding the profit margins of more than 10 percent that they generated, easily double the profitability of mainstream automakers.
"I don't see those golden times coming back," said Jürgen Pieper, an auto analyst at Bankhaus Metzlerin Frankfurt.
He thinks luxury carmakers will need to spend more on research and development while their revenue will be undercut by a shift in demand toward smaller premium cars. In Europe, small luxury cars such as the Mercedes C-Class and BMW 3 Series are now the largest premium car segment.
Renault, which tried for years to break into the premium car markets, no longer sees it as an objective worth pursuing. "We're seeing people who could buy costly cars look for something simple," said Patrick Pelata, Renault's No. 2 executive after CEO Carlos Ghosn.
Renault executives are astounded by the success of its no-frills Dacia Logan vehicles in Germany. Renault bought the Romanian carmaker Dacia in the 1990s to make vehicles for the least affluent Eastern European and central Asian markets. Germany was not in Renault's sights.
But Renault's dealers in Germany say they are increasingly hearing customers say that they don't want to "over-consume," and they don't want to waste their own money or the planet's resources.
Executives say the trends are taking hold in North America, too, and will influence other markets, but not as deeply. In China, all the major luxury brands reported double-digit growth through July this year, according to Bank of America-Merrill Lynch.
BMW, which had a hall to itself at the show, revealed a variety of models featuring hybrid technologies, the sporty diesel-electric Vision EfficientDynamics concept, the BMW ActiveHybrid 7 and ActiveHybrid X6. "This environmental message is going to play a stronger role in all car markets," sales chief Robertson said. "The U.S. is no exception."
Article
Looks a lot better than the Volt. But i'll be buying neither.
