German Luxury Car Makers Jumping Into Small Car Market And It Scares Investors

German luxury car makers are investing heavily in new small vehicles, and investors are worrying that maybe, just maybe, they are being a bit too ambitious.

But many experts think big sales targets for the new Mercedes A class and the latest Audi A3 will be accomplished with relative ease. It is Europe's mass car manufacturers that should be getting nervous. BMW, Audi and Mercedes are moving relentlessly down-market, eliminating what once were highly profitable sales for mass manufacturing companies like Renault and Peugeot of France, GM Europe's Opel-Vauxhall and Ford Europe.

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PLAY - 9/12/2012 12:33:30 PM

+3 Boost

They are adjusting to changing market situations. Fuel prices, government policy, and consumer behavior are all trending in a bad direction for larger premium vehicles with large gas guzzling engines. Investors should be relieved to see that automakers are not going to cling to the past and are adjusting with the times.

Car4Life - 9/12/2012 12:47:10 PM

+3 Boost

Survival of the fittest or most diverse product offerings

MercBasher - 9/13/2012 1:54:17 PM

+1 Boost

Having the most offerings has nothing to do with profitability. Actually with each new model there is a dramatic increase in costs. Some of these costs and investments are for tooling, the maintenance of supplies/parts, marketing, dealer training and new vehicle inventory. In addition there are other issues with a new model [as opposed to a replacement model] which may include cannibalization of sales of other models, mixed marketing messages and the dilution of a brand. IMO manufacturers should be looking to reduce the complexity of their product offerings not increase it. There is still overcapacity!

GermanNut - 9/12/2012 2:59:13 PM

-3 Boost

It's nice to see Audi being a trend-setter in the premium compact segment. The A3, as indicated in the article, will sell extremely well in Europe and globally.

bmwm6 - 9/12/2012 3:21:44 PM

+1 Boost

Lol, a trend setter? The 1 series out sells the A3 in europe. Mostly because most people who would look at an A3 end up getting a Golf since there is very little difference.

chewy - 9/12/2012 4:37:29 PM

+2 Boost

The new A3 has beaten the 1 series in all the German comparisons that I have seen. The 5 door which makes up most of the A3 sales (just like the 5 door does with the 1 series) is still the old A3 with the new one right around the corner as well as the sedan. Somehow I think the A3 sales will match if not go ahead of the 1 series once the A3 is all updated.

HughJass - 9/12/2012 6:16:13 PM

+3 Boost

If I'm going to drop $25,000 on a car, I'd take the biggest one with the most options (i.e. Fusion/Accord) instead of some soda can with a fancy trinket on the hood. That's just me though. What the hell do I know, I don't even shop at Walmart.

AlleVier - 9/12/2012 7:23:53 PM

0 Boost

Thanks for letting us know what you'd do IF you could drop 25 large ones on a whip, playa.