Are low-cost car owners really committed to their brand?

asks Remy Pothet, Global Practice Head of TNS Automotive

With the increasing polarisation of the new car market, global market growth over the next decade will be driven mostly by the budget and premium car segments, leaving the mass volume OEM's to fight for market share in the middle.

OEM's are tapping into growth opportunities at both ends of the market.

In fast growing emerging markets, the rising number of new affluent consumers who aspire to exclusive and luxury models, is encouraging car manufacturers to develop their high-end product portfolio. At the current pace, the premium car segment could well reach up to 8% of the global car market by 2020.

At the other end of the spectrum, growth in the low-cost car segment is forecast to accelerate, reaching 20% of the global car market by 2020. This increasing demand for budget cars is fuelled by a combination of factors: the rise of middle-class consumers from BRIC and Central Europe with a limited budget (US$ 10k) for their new car purchase, the long-term market trend towards small, environmentally-friendly cars, and the rising demand in Western markets for basic, no-frills cars as consumers choose to divert their spending from automobiles to alternative categories that better reflect their priorities.

Innovation is at the heart of the budget car segment.

Low-cost cars are no longer synonymous with poor quality, obsolete technology or cheap imitations! Instead, traditional car manufacturers and newcomers from China and India are increasingly investing in highly innovative and cost-effective processes to develop sturdy and reliable models that meet consumers' specific functional needs.

Traditional OEMs under mounting pressure.

Dacia is a perfect illustration of the shift in the automotive industry. Initially designed to address consumer needs in emerging markets, the Dacia Logan by Renault achieved unexpected success among Western European consumers who rapidly adopted this cheap, yet robust model. This success story unsurprisingly prompted all of the big players in the car industry to follow in Renault's footsteps...

But are low-cost car owners really committed to their brand? I certainly think so, and so do car owners in France. Dacia recently astonished many car industry insiders by taking second place on the Car360 podium, in terms of brand performance as voted by vehicle owners, behind Audi and ahead of Mercedes. This illustrates that Dacia has indeed succeeded in attracting highly committed consumers who appreciate the brand for delivering on its promises at a very attractive price!

One thing is clear: traditional OEMs need to re-think their marketing strategies quickly and find innovative ways to reposition themselves in this increasingly dynamic market if they don't want to see their market share being squeezed further by the low-cost car phenomenon.....

Comments

[Billion]

It seems like there is a shift in action right now. As a dealer, I see the types of vehicles that sell more. With the increase in fuel prices, we have seen an increase in small low cost vehicle sales. Most often in the 16k to 21k range for new. I wish we had more vehicles in the 13k range.

[how much compensation in car crash]

The new system would be a flat one where purchasers of more expensive cars have to pay more taxes than the low-cost car owners.

[Howardlerton]

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[oakley frogskins]

Not you have to articles was so good, later to focus on.

[Rooka]

in most states, you cnaont buy a vehicle until you are 18. you can provide the money, but it would have to be in a parent's name. as for the cost of insurance, it depends on the make and model and year of the vehicle. a newer vehicle will be more expensive due to the additional coverages you would want such as comprehensive and collision as well as liability. if an older vehicle, it may be too expensive to purchase collision and/or comprehensive so you would just get liability. rates will vary from company to company with some being cheaper than others. also, if you have drivers education you can get a discount on liability, as well as for drug education, and multi-car discounts on your parent's insurance.rather than buying a seperate policy, get it on your parents policy and you will be rated on their vehicle so you can drive it as well, though you inform the insurance company that you have a seperate vehicle that you will drive.don't buy a car just to learn to be a better driver, but so you will have your own car. driving it will give you the advantage of getting more experience as well as provide you seperate transportation.