Ford Motor Co. is planning to take on luxury carmakers in Europe by offering high-end versions of its volume models as it tries to stop its financial bleeding in the region. Executives at Ford’s Europe base are assured that they can persuade consumers to shell out extra cash for current models fitted with luxury leather interiors and chrome moldings and for premium customer service – all under a new label, Vignale.
However, since most of Ford’s rivals are targeting the same buyers, the carmaker’s approach is laden with risks. Boston Consulting Group senior partner Nikolaus Lang remarked to Reuters that he doubts that volume carmakers could generate considerable volume in the premium segment, adding that penetrating the European premium market is “troublesome."
Fiat Chrysler Automobiles chief executive Sergio Marchionne is not a fan of taking mainstream brands upmarket. He remarked that brands that are between a mass-market and a premium brand “don't have legs."
If Ford proves successful in its Vignale move, the carmaker might be able to achieve profitability in Europe, where it has been losing money since 2010. IHS Automotive expects Ford to post up to a 25-percent jump in sales in Europe to 1.65 million cars by 2020, as the carmaker introduce at least 25 new or upgraded models by 2017.
The rise in volume, however, may not matter much if it cannot raise prices. Ford has managed to up its market share in Europe to 7.5 percent in the first four months of 2014 from 7.2 percent, thanks to an 11-percent jump in sales in the region in the same period, according to data from industry association ACEA.
However, the surge in sales could be attributed to its discounts that are larger than those offered by other carmakers. [source: automotive news - sub. required]