UK: Upper mediums continue Europe decline
The upper medium car market is continuing its steady decline while niche family car segments continue to grow strongly across Europe's 'big five' markets of Germany, France, Spain, Italy and the UK.
Jato Dynamics said that, in recent years, manufacturers have massively expanded their product portfolios in a bid to exploit untapped areas of the market and gain crucial market share.
In the last 20 years the market has seen the birth of the MPV (multi-purpose vehicle), SUV (sports utility vehicle), MAV (multi-activity vehicle) and the rise of the 'recreational' 4x4 or SUV.
Many of these niche segments have now split even further into 'sub-segments'. The SUV market now has products slotting into 'small', 'medium, 'large' and 'luxury' categories, each further refining the segment and drawing buyers from the traditional, established market segments.
The upper medium segment has been steadily declining for several years and so far this year the volume end of the D segment is a further 17.7% down during the period January to April. Even the somewhat stronger premium end of the D-segment (incorporating popular models such as the BMW 3-Series and Audi A4) is suffering with a 3% decline in the same period.
According to Jato Dynamics, numerous factors contribute to these figures - not least the fact that two of the key models in the segment, the Ford Mondeo and Renault Laguna are in the run-out stage prior to replacement. Similarly, significant changes to the VAT regime in Germany - traditionally a strong D-segment market - has further led to a depression in sales during 2007 but Jato cannot see any indication that the general decline of this segment will be reversed in the medium to long term.
"With manufacturers employing ever more sophisticated marketing techniques, consumer demands are becoming increasingly complex and many families now seek vehicles that better reflect their lifestyle aspirations," said Jato spokesman Nasir Shah.
"This has been one of the key drivers behind the success of the SUV and MPV (minivan) markets where vehicles offer greater flexibility and greater scope for tailoring to individual requirements."
New mid-size entrants into the MPV segment such as Ford's S-Max, the Mazda 5 and the Citroen Grand C4 Picasso have expanded the segment even further and have contributed to further migration from other more traditional segments. MPVs remain popular in Europe's 'big five' markets and this popularity is likely to put the established hatchback and saloon (sedan) markets under continued pressure, Jato said.