The Economist Forecasts Trouble For German Car Industry
The British weekly "newspaper" The Economist has reported that Germany's car industry may well have priced itself out of the lucrative market of developing nation-states.
Citing the renowned and excellent VW-Audi Group, porsche, Mercedes-Benz, and BMW as examples of how the German car industry has succeeded in making prestige marques that cater to a massive global clientele, the report also suggests that it is their very high quality, high cost nature that's permitting General Motors and Renault to pick-up sales in what will be an explosive market in India and China for new cars selling under $5,000.
For any of the above marques to move downmarket to cater to the low-cost base would destroy their sterling images.
The article, "The big-car problem," is an insightful piece based on reasonably sound assumptions. The folks in St. James are not altogether right, though.
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3 Responses to “The Economist Forecasts Trouble For German Car Industry”
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Porsche, Audi, BMW and Mercedes definately won’t sell cars for under 5000$ ever, so they are excluded from those new markets. But they also don’t need the high number of sales that the mass manufacturers need.
On the other hand, VW is quite active in countries like China or India, and as soon as the economy in those countries finally kicks in, there will be an ever increasing market for luxury as well. The luxury market will grow slower, but the margins are way bigger.
Porsche, Audi, BMW and Mercedes definately won’t sell cars for under 5000$ ever, so they are excluded from those new markets. But they also don’t need the high number of sales that the mass manufacturers need.
On the other hand, VW is quite active in countries like China or India, and as soon as the economy in those countries finally kicks in, there will be an ever increasing market for luxury as well. The luxury market will grow slower, but the margins are way bigger.
Never say never, Tom!