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Marketwatch: Volume brands show downward trend

VOLUME carmakers across Europe are seeing registrations fall above the average rate and residual values plummet as more buyers go for prestige or budget marques.

The situation is getting worse and could mean the end for the weakest players, according to industry analysts EurotaxGlass’s.

Ford is the biggest net loser as traditional volume manufacturers saw their share of the overall new car market fall from 88% to 73% over the last decade. Other brands are seeing their sales stand still in a time of rising overall sales. Honda, Toyota and Volkswagen have all outperformed the overall market.

Meanwhile, prestige manufacturers have more than doubled their share of new car sales over the same period, from 10% to 21%.

The budget brands have increased from 3% to 6%, largely in the last three years. That growth is remarkable, EurotaxGlass’s claims, as the firms rely on private rather than corporate sales and the UK’s private market fell overall by more than 10% in 2005.

Over the next five years, EurotaxGlass’s says the prestige brands will occupy an even larger part of the small and lower-medium sectors, currently dominated by the volume players.

The budget carmakers will be attacking this space but at a much lower price point. Chinese manufacturers will also be entering the budget sector over the next few years. ‘The volume-brand carmakers are making progress in cutting production and distribution costs,’ said Adrian Rushmore, managing editor at EurotaxGlass’s.

‘However, they also need to invest much more in communicating distinctive and appealing brand values, and in particular make sure these are understood by used car customers as there is every chance they will become future new car purchasers for that brand.’

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