AUTOMOTIVE NEWS EUROPE E-MAGAZINE

Hot models help Jaguar, Dacia, Mazda defy the European downturn

Dacia, Mazda and Jaguar were Europe's fastest-growing brands last year. The F-Type (left) boosted Jaguar sales; the Sandero (right) helped Dacia; and the CX-5 (center) was a success as Mazda's first compact crossover.
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Product is king. That fact was proved once again in Europe last year as new models such as the Dacia Sandero, Mazda CX-5 and Jaguar F-Type helped 10 of Europe's 30 leading auto brands increase year-on-year sales despite the region's weak economy. By comparison, only seven brands boosted sales in 2012 compared with 2011. Automakers benefited from a strong second half in 2013. Most car executives believe the momentum will continue this year, resulting in an overall sales increase in European new-car sales of up to 3 percent.

Dacia got a huge boost from the second generation of its no-frills Sandero subcompact. The car's sales rose 70 percent to 121,398. The new Sandero is more refined and more fuel-efficient but its price remained the same as its predecessor at 7,900 euros. This helped the model appeal to budget-conscious car buyers who remained reluctant to make big purchases last year. The Romanian-built car's stellar performance had a wide-ranging positive effect as it:

• Lifted Dacia's European sales to a record 294,422 units.

• Made Dacia the region's fastest-growing brand, up 23 percent (see table on Europe brand sales, above right).

• Helped parent Renault Group's European sales to increase by an industry-leading 4 percent (see table on Europe auto-group sales, above right).

The rising volume came despite a 2 percent sales decline at the namesake Renault brand in an overall market that ended 2013 down 2 percent to an 18-year low of 12.3 million units.

Mazda was second to Dacia in year-on-year growth because of strong demand for its CX-5, which became the Japanese automaker's top-seller in Europe. Sales of the CX-5 doubled last year in Europe to more than 50,000 units, according to data from market researcher JATO Dynamics, as the popularity of SUVs and crossovers in the region continued to grow. The CX-5's success is the main reason that Mazda's 2012 European sales rose by 18 percent to 147,307 vehicles. The Jaguar F-Type was another vehicle largely responsible for its company's 2013 success. The F-Type's 2,743 European sales accounted for 80 percent of the Jaguar's growth last year. Because of the F-Type, Jaguar's overall sales increased 16 percent to 27,394.

"The F-Type is really designed to be a brand-builder and to remind people that Jaguar is alive and well, ahead of the big product expansion starting in 2015," said Max Warburton, a financial analyst at Bernstein Research in Singapore. He said the F-Type also helped Jaguar's bottom line by selling for higher prices than many in the company thought realistic.

While 10 brands finished as winners in Europe last year another eight declined less than the market, which let them gain or maintain market share, while the remaining 12 underperformed a market that was down for its sixth consecutive year from a 16 million peak in 2007.

Group gains

Renault and Daimler were the only two large groups to increase their sales in Europe last year, each growing 4 percent. Mercedes-Benz led Daimler's rise as Smart sales slid due to the age of its single model, the ForTwo. The Mercedes brand's 2013 sales increased 5 percent to 617,244 units on strong demand for the A class. Sales of the compact, which passed the C class last year to become Mercedes' top-selling model in Europe, were up 87 percent to 130,864 units. Mercedes also got a 28,000-unit boost from the all-new CLA coupe-styled compact sedan, which is part of the company's fast-growing family of compacts that includes the A class, B class and will add the GLA SUV next month.

"Mercedes' growth has come almost exclusively from the A-class platform products. It's obviously not a very profitable car, but Stuttgart is delighted with the reception that the product has received – it's done everything hoped of it and more, proving the brand can work with younger buyers and can make conquest sales," Warburton said.

Sales at Daimler subsidiary Smart were down 7 percent last year. The brand will debut the third generation of its ForTwo minicar at the Geneva auto show next month. A four-seat car is also on the way for Smart to help boost volume.

Among Europe's other large groups, Toyota, BMW, VW and Hyundai-Kia declined at a slower rate than the market while Ford, General Motors, Fiat-Chrysler and PSA/Peugeot-Citroen lost both European sales and market share in 2013.

Ford of Europe CEO Stephen Odell put his company's 4 percent decline in perspective. "We significantly reduced sales to rental fleets and dealer self-registrations, betting that we could correspondingly increase retail sales with our new vehicles," Odell said in a statement. "This has really paid off: retail sales are more profitable and better for brand image and residual values."

Chevy, Lancia take hits

Two of the three worst-performing brands in Europe last year – Chevrolet and Lancia – face major changes. Chevrolet will withdraw from Europe by the end of next year and Lancia only will be sold in Italy. Chevrolet's 2013 sales slid 18 percent to 143,307 vehicles and Lancia's volume was off by a fifth to 74,818 units.

Chevrolet parent GM will concentrate on returning the Opel/Vauxhall brand to profit. "This lets [GM] focus more on Opel and Vauxhall, while abandoning a brand strategy with Chevrolet that I don't think many people bought into," Morningstar analyst David Whiston said.

Meanwhile, Lancia sales outside of Italy will be discontinued as the brand focuses on its home market, where it will sell one model: the near-premium Ypsilon minicar. Fiat Group CEO Sergio Marchionne announced the changes for the 108-year-old brand last December. Said Giorgio Elefante, Italian automotive sector leader at consultancy PwC in Milan: "Concentrating Lancia on the Ypsilon in Italy is logical under current circumstances." Last year nearly 80 percent of Lancia's sales were in Italy and the Ypsilon accounted for three-quarters of that volume.

Fiat's other-near premium brand, Alfa Romeo, had the biggest sales decline of the top 30 brands in Europe, down 29 percent to 64,415 units, a level the brand has not seen since 1964.

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Bloomberg and Reuters contributed to this report

You can reach Luca Ciferri at lciferri@crain.com.

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