Europe: despite increased sales, discounts still big image

After a six year slump that took demand to new lows, late last year and at the beginning of 2014 things look a bit brighter in terms of sales, but the automakers continue to fight a big discount battle.

This is very good news for consumers, which now have the opportunity to buy a car cheaper – and if the one they want is not discounted enough they can for sure find a competitor that would match its demands.

But as far as top executives are concerned, the problem is keeping them awake at night – even if the forecasts and analysts all predict that 2014 will see a 3% growth. Despite the growing trend, sales are actually still somewhere in the 20% below their last peak.

“It’s too soon to start singing the victory march,” says Fiat Chrysler Automobile CEO Sergio Marchionne.

“In the first two months there has been no change in the pricing arena,” adds Ford of Europe CEO Stephen Odell. “We still have a market with a production capacity of about 20 million and sales of 14 million. From an industry perspective, we would need a significant shift in demand to see everyone turn back the spigot a bit” [on discounts].

There are carmaker that managed to improve their situation – Ford upped by 1% its retail sales even when it started to cut costs decisively, while also “trying to stay below industry average” on discounts.

Renault is another example – it managed to up its prices by 7% in the last two years, thanks to growing sales from the Clio line and the new Captur small crossover.

Via Automotive News Europe