22nd December 2016

Are former budget brands ‘getting ideas above their station’ or tangibly moving upmarket?

Wind the clock back by even just half a dozen years or so, and the car market was somewhat simpler. Fleet and private motorists desiring luxury, strong perceived build quality and formidable specification lists knew they would have to look at marques regarded as upmarket – the likes of BMW, Mercedes and Audi. The mass-market middle-ground was occupied by brands such as Ford, Vauxhall and Renault, while the label ‘budget’ was typically associated with makes including Perodua, Chevrolet and Kia.

Things began to change with the arrival of models like the Kia Optima, a key bullet-point from its press release1 reading ‘leading levels of premium amenities and safety technologies’, attributes largely considered incongruous from this Korean brand. Czech automaker, ŠKODA, was brought into the VW Group fold as its budget offering, but it seemed to possess equally grand aspirations, a ŠKODA insider revealing to Autocar magazine2 the company’s management’s “determination to elevate the brand”. The original Superb was instantly regarded as living up to its name by journalists and punters alike, and in his book3 ‘ŠKODA Superb: a new era’, Jürgen Lewandowski documents how the moniker’s latest incarnation ‘points toward the future of the brand’ and in many respects ‘puts some luxury saloon cars to shame’.

Kia, Hyundai and ŠKODA unambiguously moved to elevate their brands’ overall images and perceived build quality, admittedly with prices logically following suit. Caps must be doffed as they all successfully managed, in a short space of time, to migrate from the budget end of the spectrum over to the centre and right of the middle-ground, which no doubt irked bosses at so-called premium firms, at least for a time.

On 21st March 2012, a press release from Dacia validated the trend by saying: “At a time when value brands and moving further and further upmarket, wouldn’t it be refreshing if an affordable alternative suddenly came along?”4 Following the Duster’s launch in the UK, CAP HPI commented in January 2013 that “budget car brand, Dacia, could gain a large foothold in cash-strapped austerity Britain” and went on to say that “Dacia is not chasing conquest business from premium brands”. It seemed that a true budget brand had arrived to fill the void left by the likes of Hyundai and Kia in particular, with Daewoo’s car operation having been canned around a decade ago6, Daihatsu7 packing up its UK car division in late 2010, and Perodua8 also pulling out a few years later.

The ‘crossover’ body-style had become decidedly de rigueur by 2012, and when it came to genuinely ‘budget’ models, the only real rival to the Dacia Duster was the SsangYong Korando9. The scarcely-known Korean brand primarily synonymous with caravan ownership was intent on increasing its exposure in the UK and Europe, but fast forward to November 2016 and the firm’s marketing and communications director, Steve Gray, has reassured fans that SsangYong plans to stick to its budget ethos. When interviewed by MotorTrader.com regarding the Mahindra-backed company’s dealer recruitment push, Mr Gray commented that “there’s also an opportunity for some ŠKODA and SEAT dealers and any of those middle-ranking ambitious path to premium brands; we’re more than happy to talk to folk who feel those brands are no longer aligned with their ambitions and interests”. Basically, he was pointing out how these formerly affordable brands are no longer operating in the budget corner of the market these days, and his sentiments are echoed by Andrew Charman’s piece on the Tivoli XLV for TheCarExpert10: “SsangYong is very clear about its place in the UK car market. Unlike certain rivals which … are ‘getting ideas above their station’, the Korean brand sees itself simply as a maker of good value 4×4 vehicles”.

MG has admittedly launched its China-built GS SUV in the UK in recent times, but despite being a very good car in many respects, it’s not expected to make much of an impact. Many people seem unaware that MG still sells cars and are surprised to learn that the GS is a lofty crossover, not a 2-seater sports car that the company was always renowned for. Writing in the Express, Nat Barnes says only serious car enthusiasts would immediately cite the MG3 and MG6 models if quizzed about what MG means today. He comments that “having returned to forecourts five years ago with the lacklustre MG6 and followed that up with the more promising but ultimately low-selling MG3, the Morris Garages brand is little more than a shadow of its former self. And with just 1,896 UK sales so far this year, Vauxhall sold more than four times more Corsas in June alone and even SsangYong is ahead of it in showrooms.”

The bargain basement end of the UK car market is dwarfed in number and volume by former budget brands that are now, in their own eyes at least, competing in more premium circles. Looking at press release headlines for the last two or three years, ‘upmarket’ is certainly a popular word that keeps on cropping up. A couple of examples are “Vauxhall’s new country estate moves Insignia upmarket” and “Peugeot continues its upmarket trend”; but the most insightful is surely “All-new Sorento drives Kia further upmarket”, the Korean brand intimating that it has been perceived as upmarket for a while and is now seeking to drive that message home even more clearly.

With recent news wires revealing that “Mazda plans to move upmarket” and with Ford pitching the new Fiesta as more premium in comparison to its growing rivals in a market that MotorTrader.com succinctly describes as “moving, seemingly inexorably, towards premium cars, SUVs and crossovers”, it seems certain that the scales will continue to be firmly tipped towards premium-minded brands, leaving all but a handful to fly the genuine ‘budget’ flag. The UK and European car market has certainly gone through a fascinating transformation in recent years and continues to do so. Of course, though, the near future is set to be determined by mobility solutions rather than actual makes and models, ensuring that this industry, which never stands still, will break into an exciting trot.

 

Sources:

  1. http://press.kia.com/eu/products/optima/optima%202011/
  2. http://www.autocar.co.uk/car-news/new-cars/skodas-five-door-coupe-plans
  3. http://www.mzv.cz/file/1696387/skoda_suberb.pdf
  4. http://www.am-online.com/news/2012/3/23/renault-starts-countdown-to-dacia-s-uk-arrival/30712/
  5. http://business.cap.co.uk/press-releases/dacia-return-could-capture-motorists-mood-austerity-britain
  6. https://en.wikipedia.org/wiki/Daewoo_Motors
  7. http://www.expressandstar.com/motoring/2010/11/10/its-goodbye-to-daihatsu-but-daft-names-remain/
  8. http://www.honestjohn.co.uk/news/miscellaneous/2014-06/perodua-uk-stops-importing-cars/
  9. http://www.autoexpress.co.uk/ssangyong/korando/59659/ssangyong-korando-sx
  10. http://www.thecarexpert.co.uk/ssangyong-tivoli-xlv-review/
  11. http://www.motortrader.com/blogs/seventh-generation-ford-fiesta-goes-upmarket-08-12-2016

 

 

 

Trak Global blog, December 2016