Striving to win
With unprecedented competition, manufacturers’ fierce fighting for market share is good news for fleet and retail customers alike, writes The Insider.
Competition – 20 years ago
I’m reminded of the slightly manufactured ‘Battle of Britpop’ 20 years ago between Blur and Oasis to be the biggest band. In 1995, after many years of mutual success, both bands decided to launch their latest products – in their case, the singles ‘Country House’ and ‘Roll with it’ respectively – and the media industry created headline stories about Blur and Oasis being enemies while stimulating consumer demand. Blur triumphed, but both bands won commercially.
In the UK car market around the same time, Ford, Vauxhall and Rover had more than a 50% share of the industry. Along with mainstream brands like Volkswagen, Peugeot, Renault and others, this left less than 10% of the competitive pie for premium brands such as BMW, Mercedes-Benz and Jaguar, and even less for the emerging brands like Škoda, Hyundai and Kia.
Competition was still hot though. In the lead up to the all-important August new plate change market, manufacturers built special editions by the thousands, investing more marketing incentives for private customers in the shape of 0% finance, extra equipment and unique trim names. Customers were targeted with models like the Escort Finesse, Astra Premier, 306 Roland Garros (my Dad bought one of those) in a bid to win those extra sales during the August buying frenzy.
In the company car sector, competition was red hot too. Many of us will remember aspiring to models like the Cavalier SRi, a Rover 620i or a Granada Scorpio. And a CD player.
And discount levels were rather different then too. A fleet manager able to negotiate a discount of 10% from a manufacturer for a commitment to buy, say, a few hundred cars over a three-year period had achieved a great deal.
And what about the premium and emerging brands? Without resorting to Google, I can’t honestly picture an image of an emerging brand’s car of the time, though many of us might recall terrible jokes about Škodas. I do remember though that BMW charged extra for alloy wheels, Mercedes-Benz had recently launched its first C-Class and Audi its first A4. And the only discounts available were typically negotiated through the dealers and their trading margin.
I don’t think Paul Weller wrote ‘The Changingman’ about company car drivers of the 1990s, but changing they certainly were. I remember visiting an IT company operating about 400 user-chooser cars in 1995 and the fleet manager told me that BMW was now the most popular brand on their fleet. And the momentum of competition hasn’t ceased.
Competition – today
Competition in the UK motor industry has changed the landscape so dramatically in 20 years and it’s quite incredible when one acknowledges the change over time. Ford and Vauxhall now claim about a quarter of the UK market and sadly there is no Rover any more. Adding the premium brands together means they achieve over 25% UK market share. And the emerging brands are emerging no more – their combined share represents about 15% of the UK market.
And the pressure to gain or to win is enormous. One can only imagine the stress on the sales teams at Audi, BMW and Mercedes-Benz – who all sold around 175,00 cars last year – in the race to be the number one brand.
But the true winner is us, the consumer. If you’re a private customer today, you may be tempted by massively discounted PCP offers of around £200 per month for a Focus or an Astra. Or a Karoq. Or a Tucson. Or an A-Class. And similarly high manufacturer discounts exist with leasing companies and brokers to tempt company car drivers and fleet operators.
One of my favourite songs of recent years is ‘Under the Pressure’ by War On Drugs. I’m sure many motor industry leaders don’t always relish the omnipresent competitive pressure to win or gain, but it certainly makes the car market super competitive and we consumers all benefit from that.For more of the latest industry news, click here.