The Squeezed Middle

If you cast your mind back to the last UK elections you’ll remember this phrase being chucked about a lot. I can’t remember who exactly said it, as all politicians have since become a faceless blur to me, blithering on about a financial crisis which none of them control. This blog, despite a title based in politics, is about cars. Who this squeezed middle is in society seems to be something that no one wants to define. However with the much simpler motorcar, it’s more easily pin pointed.

What I’m talking about is long standing manufacturers such as Ford, Vauxhall, Renault, and Toyota. Above them, pushing down, are the likes of Audi, BMW and Mercedes, while below them Hyundai and Kia push up. These manufactures are in the middle, and they are being squeezed. For example, the Laguna, a name that’s been with us for 18 years, is being pulled from sale in the UK. Meanwhile Hyundai have just launched the largely superior i40. This would have seemed rather improbable a few years back; the decent selling Laguna II had little to fear from the Hyundai Sonata.

In fact, family saloons are the best example. Where once the ‘middle’ manufactures fought hard for sales in this area, the German executives have now all but defeated them. Only the Vauxhall Insignia from the old guard remains on the top 10 sales charts, thanks no doubt to Vauxhalls fleet friendly attitude. The consistently good Mondeo barely makes an appearance, the next one will not even be developed primarily for Europe. Other manufactures such as Peugeot, Citroen and Toyota still compete, but how often do you see them, and how often do you see a BMW 3 series? While this has long since been happening, now even the Focus is no longer safe from encroachment, the BMW 1-series and Audi A3 are very popular, and are likely to make further inroads into the mainstream manufactures sales. It seems that despite the current pressures, people still want that premium badge.

Of course not everyone cares about what badge lies upon the bonnet, but those who don’t are increasingly turning to Hyundai’s and Kia’s, rather than Ford’s and Vauxhall’s. You can understand their logic, why not save a penny in these tough times? The figures certainly don’t lie; Renault and Toyota have fallen from over 5% UK market share in 2006 to 3.51% and 3.74% respectively. It’s a different story for Hyundai and Kia, now with 3.15% and 2.80%, up from sub 2% figures in 2006. On the premium side of things you’ll find BMW with 4.99% market share, having gained over 1% since 2006, with Mercedes only slightly behind and Audi rocketing ahead, from 3.65% to 5.9%. Meanwhile Fiat, Ford, Honda, Mazda, Peugeot, and Vauxhall are watching their market shares decline.

They say there’s always an exception that proves the rule and you may have noticed that a certain manufacturer has been mysteriously absent thus far, Volkswagen. Their market share has increased from 8.1% in 2006 to 9.26% last year, meaning they’re third only to Ford and Vauxhall with their declining shares. Europe wide they are the biggest manufacturer, overall their sales increased 140% year on year. Why? Well, I don’t know. I would hypothesize that their combination of a nearly premium image and reputation for quality drives sales. Either way I can imagine VW are pretty happy, especially with Audi sales shooting up and Skoda gaining too. So the manufacturer who sells budget, mid and premium cars is gaining across the board, rather than squeezing them selves in the middle. As I said, exception that proves the rule.

So, 2012 is not a good place to be a Manufacturer in the middle. If you were being especially gloomy you could call Supermini’s and Small Family Cars the mainstream manufacturers last frontier, with the budget brands attacking from below, and the premium manufacturers attacking from above. How will it turn out? It’s safe to say all of the manufacturers will be doing their best to gain sales, but much like the politicians, the global financial crisis determines their circumstances, not the other way round.