Striving to reverse losses and boost profitability in Europe, Ford and Renault are planning to follow Citroen and go upscale, hoping to snatch away sales from the established premium brands.
The premium brands usually come home with double-digit operating margins, while mass-market brands earn single-digit profits on their higher volume models – that is, if they even make a profit, as most of them are in the black since the onset of the European downturn. But, as we are talking about the segment where the German premium brands compete, there is a high possibility that not everyone would succeed.
But the need to move upscale has been heightened by pressure from BMW, Mercedes-Benz and Audi. The trio has increased their shares of the European market in the first eight months of this year with smaller, less pricey models like the A Class or the A1. Coming from behind are Korean sister brands Hyundai and Kia, as well as budget-oriented Dacia.
Both Renault and Ford plan their premium assault with luxury trim versions of existing cars – Ford with Vignale and Renault with Initiale Paris. For the moment neither plans to create stand-alone models, which Citroen has done successfully with its DS brand.
Via Automotive News Europe