Fleet News

Marketwatch: Budget brands pose increased threat

BUDGET manufacturers are making significant strides in improving the residual values and in some cases outperforming volume brands.

Clever marketing and targeting of niches, improved build quality, volume controls and better styling has helped manufacturers such as Hyundai and Kia improve used values, and increase share in the market.

According to research by Glass’s, many budget models can compete on residual values with more prestigious names. It claims the Hyundai Coupe performs better than the Ford Puma, the Hyundai Santa Fe matches the Land Rover Freelander and the Kia Sedona retains a higher percentage of its original cost than a Renault Espace.

Chris Smith, car editor at Glass’s said: ‘The challenge for the budget manufacturers is to break through into the big-selling small and lower-medium sectors, where volume players like Ford and Vauxhall dominate. Whether significant numbers of UK buyers will be willing to gamble on budget vehicles in these sectors remains to be seen, but no-one should doubt that the likes of Kia and Hyundai have the resources and commitment to threaten the established volume players.’

Glass’s reckons that the growth of the Korean brands should be causing the most concern for mass-market manufacturers, claiming that in the last 10 years, the budget brands had grown their market share from under 2% to almost 5%, with this growth set to continue.

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