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Scrappage scheme transforms car market

Although the scrappage incentive has only just got going, there are already startling effects on the types of car people are buying.

In June, the city car/mini segment grew to 10.7%, making it easily the third largest segment in the UK market.

To put that in perspective, it now has more than twice the market share of five years ago and 10 times the share of 15 years ago.

Within the segment, the new Ka is maintaining its leadership, albeit with lower share than the old Ka used to manage even in its last years (14.1% this year compared to 22.5% in 2007).

At a manufacturer level, Fiat has just assumed segment leadership (14.8%) thanks to the combination of the Panda and the 500.

Superminis also have something to celebrate. In June the segment overtook lower medium as the largest segment overall (although it is still behind lower medium year-to-date), the first time this has happened since the introduction of the current crop of leading lower medium models (Focus, Astra, Golf) in 2004/2005.

Among the larger segments, there have mostly been the expected falls in penetration.

The one exception has been upper medium, which has enjoyed a rise.

This is mostly down to Vauxhall, whose Insignia is now segment leader with 24.3%, compared to 22.5% for the Mondeo – but the important fact is that the run-out Vectra has added another
7.5 percentage points to Vauxhall’s share.

The upper medium segment is now highly polarised, with four manufacturers – Vauxhall, Ford, VW and Toyota – accounting for 78.9% of sales.

At a manufacturer level, the scrappage incentive is also leading to some remarkable surges.

At one point in June, Hyundai was the leading retail brand in the UK and it finished the month with an overall share of 3.0%, while Kia was on 2.8%.

At a group level, Hyundai-Kia had the fifth largest share of the overall market. Similarly, Suzuki and Chevrolet increased their share by about half.

However, the problem for these smaller brands will be keeping up the momentum. With factories on the other side of the world, it is hard to respond to sudden surges in demand.

Over the next couple of months, penetration could start to slip back for some of them as the supply pipeline is sucked dry.

While Ford can respond to a penetration rise of a couple of percentage points fairly easily, the same is not true of a brand based in Asia.


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