Upmarket and Bigger
#1
04-12-2004, 03:06 PM
Over on Motoringfiles today we have had a little discussion going about the 1-series.
I'd like to examine an offshoot of that topic a little further. Specifically, the trend (mandate?) that each new automobile generation needs to be pushed a little further upmarket, gain some size, and add some horsepower (nothing wrong with that last one).
Examples:
- current Civic is as large if not larger than the original accord
- MK4 Jetta is as large as the B4 Passat.
- Audi A6 is nearly as long as the previous generation A8
- E46 3-series is about the size of the E34 5-series.
- E60 5 has grown to the size of the E38 7 (i, not the iL)
We can only guess how large a 777iL will be when the E65 is replaced (BMW probably won't use 777, but that number does hint at the potential size growth).
What's the problem with this?
There are two problems that I see.
Problem 1: How to reclaim the size/price range you're vacating at the lower end?
This is BMW's main issue with the 1-series. Having formed a "sport premium" image (deserved or not), does the introduction of a new "lower end" line of cars undercut the image of the rest of the range? Mind you, that lower end was where they were just selling cars not all that long ago in terms of price and size.
Personally, I think the public is actually fairly receptive to this if it is executed with the same attention to detail and materials they have become use to. It's easy to mess this up (see the 318 and the Merc Compact). That said, from all appearances the 1-series is turning out to be a capable and deserving addition to the BMW line-up. VW is also confronting this issue (growth of the Golf) by bringing the Polo to the U.S. when the MK5 Golf is released here.
Problem 2: Increasing size and increased price
This problem can be seen pretty acutely right now with VW and the Phaeton. They are challenging what people think of VW ($90,000 for a W12 Phaeton), and so far it has been a bumpy road. VW's problem in my estimation is two fold. First, their dealer network isn't prepared to delivery the service that people purchasing a $90,000 car have. They have a hard time living up to the service expectations of Jetta and Passat owners, let alone people considering an S-class or a 7. The second part of VW's problem is that they tried to go to high to fast. There is huge hole between the Passat and the Phaeton.
That may not be the best jumping off point for a discussion, but I should probably stop my frustrated rambling.
I'd like to examine an offshoot of that topic a little further. Specifically, the trend (mandate?) that each new automobile generation needs to be pushed a little further upmarket, gain some size, and add some horsepower (nothing wrong with that last one).
Examples:
- current Civic is as large if not larger than the original accord
- MK4 Jetta is as large as the B4 Passat.
- Audi A6 is nearly as long as the previous generation A8
- E46 3-series is about the size of the E34 5-series.
- E60 5 has grown to the size of the E38 7 (i, not the iL)
We can only guess how large a 777iL will be when the E65 is replaced (BMW probably won't use 777, but that number does hint at the potential size growth).
What's the problem with this?
There are two problems that I see.
Problem 1: How to reclaim the size/price range you're vacating at the lower end?
This is BMW's main issue with the 1-series. Having formed a "sport premium" image (deserved or not), does the introduction of a new "lower end" line of cars undercut the image of the rest of the range? Mind you, that lower end was where they were just selling cars not all that long ago in terms of price and size.
Personally, I think the public is actually fairly receptive to this if it is executed with the same attention to detail and materials they have become use to. It's easy to mess this up (see the 318 and the Merc Compact). That said, from all appearances the 1-series is turning out to be a capable and deserving addition to the BMW line-up. VW is also confronting this issue (growth of the Golf) by bringing the Polo to the U.S. when the MK5 Golf is released here.
Problem 2: Increasing size and increased price
This problem can be seen pretty acutely right now with VW and the Phaeton. They are challenging what people think of VW ($90,000 for a W12 Phaeton), and so far it has been a bumpy road. VW's problem in my estimation is two fold. First, their dealer network isn't prepared to delivery the service that people purchasing a $90,000 car have. They have a hard time living up to the service expectations of Jetta and Passat owners, let alone people considering an S-class or a 7. The second part of VW's problem is that they tried to go to high to fast. There is huge hole between the Passat and the Phaeton.
That may not be the best jumping off point for a discussion, but I should probably stop my frustrated rambling.
#2
04-12-2004, 08:19 PM
My take is that the bane if civilization is a concept called brand extension. The theory is that to leverage the investment in your brand, you should extend it to other, complementary segments. Car companies do this at their peril. Coke has like two extensions, period. Pepsi one. BMW got it right with MINI (re create a brand) and will undoubtedly pay a price (like Mercedes is doing now) for dumbing down a notch or two with the 1 series........then again, what do I know...I'm not even a car salesman.... :smile:
#3
04-13-2004, 09:22 AM
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Dave, don't you know bigger is better?
This is a weird phenomenon, I agree. All of the cars get bigger, and then they have to find a new one to put at the bottom.
I also don't understand the way companies compete with themselves. Why does VW need the Phaeton when they have Audi to sell the A8? (I think they're the same company, right?) Do they think they'll get more market share that way?
At some point around 1990, Nissan, Toyota and Honda decided to move up with Infiniti, Lexus and Acura. Now more prestigious marques are trying to move down, like BMW with MINI. And Koreans are taking the low-end vacated by Japanese makers.
It seems everyone is trying to cover the entire market, instead of catering to their strength. Look at Porsche building an SUV! What's that about?
I don't know, but I think some of these companies are going to be in trouble as a result of overexpansion at some point in the future.
But to get back to the question, you can't come out with something new and improved and have it be smaller, unless its an electronic device or an appliance. Bigger = Better in auto marketing.
This is a weird phenomenon, I agree. All of the cars get bigger, and then they have to find a new one to put at the bottom.
I also don't understand the way companies compete with themselves. Why does VW need the Phaeton when they have Audi to sell the A8? (I think they're the same company, right?) Do they think they'll get more market share that way?
At some point around 1990, Nissan, Toyota and Honda decided to move up with Infiniti, Lexus and Acura. Now more prestigious marques are trying to move down, like BMW with MINI. And Koreans are taking the low-end vacated by Japanese makers.
It seems everyone is trying to cover the entire market, instead of catering to their strength. Look at Porsche building an SUV! What's that about?
I don't know, but I think some of these companies are going to be in trouble as a result of overexpansion at some point in the future.
But to get back to the question, you can't come out with something new and improved and have it be smaller, unless its an electronic device or an appliance. Bigger = Better in auto marketing.
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