24/05/2010

I have touched on the importance of the "brand" and how closely it is bound to manufacturers used car values before. I believe this has become THE single most important factor in relation to RVs, more so than even volume at present.

In this blog I offer a quick update on the state of the major prestige volume brands...

First up, and without a doubt the strongest brand at present, is Audi. The ascent may appear to be a quick one to many but in reality it started in the 1990s with the introduction of the first A4 range. They are now within touching distance in volume terms of the long term king of this sector BMW and in most sectors they outperform the competition residually. This strength is largely due to the "brand". Sure, there are many highlights in their range, especially niche products such as TT, Q5, A5 and R8 which are class leading for me, particularly in the design stakes; however, much of their portfolio is no better than their competitors' offering, nor is it significantly cheaper anymore. It's difficult to see how this lead in terms of RVs and brand can be improved upon and I guess herein lies the issue for Audi: it was not easy to get to where they are now, but perhaps its just as tough to stay there...

BMW still sell more new cars than anyone else in the prestige space and, with the inclusion of Mini, by some distance. However as discussed above, their RVs are no longer class leading in most sectors. Is this to do with volume? Well certainly this is part of the issue but the main issue might be the weakening of public perception of the brand. I would argue that the issue is not product related as the majority of their product portfolio stands up to their competitors well. Ultimately when you are succesful and have more volume on the roads than your competitors, the downside is that your cars appear more common and somehow less prestigious because of this. However there are signs of improvement with BMW's values increasing in the past 6 months and their used car values appear the best value in the sector. This, together with new product coming to market, should allow smaller numbers to be sold in the volume sectors, creating a better balance and a resurgence.

Mercedes have had a tough decade. Public perception of the badge has fallen due to exceeding their natural volume some years ago and the whispers of quality issues. I suspect this was overblown but the reality is that the 3 pointed star was overtaken by Audi and BMW. Demographically Mercedes also had a harder time appealing to a wide range of customers (its a powerful trick that Audi appeals to men, women and to ages from teens up to pensioners). However volume fell and product has improved. The new E class is certainly a great car and in demand and, with new banner products such as SLS, the turnaround appears well under way.

Last but not least is Jaguar. Similarly to Mercedes, Jaguar had a brand issue and was in reality ailing for many years. What has happened to change this? Well it can be summed up largely by "the XF effect". Can one car change an image? It would seem so. The change in ownership may have raised a few eyebrows, but it does not seemed to have put customers off. Residually the XF is the strongest in its sector by some distance. No doubt this will change with the introduction of new competitors this year, but its still the best RVs Jaguar has had for many a year. The death of the X type and the £19,995 car has also helped matters. The X type was perhaps unfairly critised on launch, but cars rarely recover from such perception issues and now, with the XF and the new XJ, the horizon looks very different. The wind is in their sails and what they now need is to give a helping hand to XF, perhaps with an estate variant, followed by a coupe to compete with A5 and 3 series. The last thing that would be prudent when you have a good thing going would be to push XF too far, thereby risking the good work done to date...

Richard Crosthwaite
Prestige Car Editor
Glass' Guide