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Market trends: Can sexy cars tempt back buyers?

The most startling quote seen so far this year came from GM Europe’s chief marketing officer, Alain Visser, who said about the upper- medium (Mondeo) sector, “People will return from other sectors because the industry wrongly thought business drivers in particular don’t want sexy cars.”

As to the idea that people could be tempted back into a segment leaking sales for the last 20 years, it initially seems preposterous.

We don’t need to rehearse the argument about buyers moving to premium brands here, but it remains a pretty powerful trend.

While there is evidence that a new type of car can bring customers back from prestige brands (the Ford S-Max being the best current example), what about a traditional large family saloon?

Vauxhall thinks it can make people take a fresh look, which is why the replacement Vectra will be called Insignia – a hugely expensive change.

The sub-text of the marketing campaign will be “premium quality from a volume brand”. But will it be enough to tempt people back?

It is possible to imagine someone going from newly-stigmatised off-roaders into an S-Max (high-ish driving position, lots of space, sharp design), but coming back to an Insignia, with its traditional concept (even if the execution is bang up to date) is another matter.

The evidence from the new Mondeo is inconclusive.

Clearly a premium product wearing a Ford badge (remember those “Ford beats BMW” headlines in the motoring press last year?), it is taking chunks out of its direct competitors, but winning back lapsed upper-medium buyers is a different matter.

In 2007, the new Mondeo sold about half of what the old Mondeo managed in 2006 (23,000 vs 48,000), which is fair enough as it was only available in the second half of the year. Interestingly, though, its retail sales were almost identical (3,300 vs, 3,500) – so its retail proportion is approximately double – an excellent result. However, there is little evidence that it brought new buyers into the segment.

So the conclusion seems to be that a great new product can arrest decline and improve the sales mix. However, the idea that it can also lead to a segment recovery still looks like wishful thinking.

GM Europe got into trouble when it over-estimated sales of the 2002 Vectra prior to launch – suppliers were so angry they went public and demanded more realistic forecasts. GM will certainly want to avoid repeating that scenario.

Upper-medium market share

The upper-medium segment market share has been in continual decline despite new product launches.

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