Ford Plans Luxury Car Market Push In Europe

May 28 2014, 7:46am CDT | by

Ford Motors is planning to push the brand into the European luxury car market by launching higher-end versions of its mass-market models under the Vignale label in the continent. These cars will be targeted at more affluent customers of Ford cars and those looking to purchase luxury cars for the first time, but it will also attempt to steal some customers from other premium car makers, BMW, Mercedes and Audi. The announcement has been greeted with some skepticism but the Ford management remains confident, pointing out that one in six owners of Ford’s S-Max model previously drove a German luxury car.
/>

The Vignale trim line will come in similar prices like an ST model but are likely to attract a different type of customer. Consumers in the upper 15% of the ST’s price band who don’t want a performance-oriented ST model are the likely buyers of cars launched with the Vignale badge. These cars will be about 10% more expensive than Titanium-trim cars. Ford expects 10% of its European sales to be Vignale cars, which translates to about 5% of its global sales. Instead of focusing on performance by tuning the engine, brakes and suspension, like Ford does with its ST line, the Vignale will offer users luxurious attributes such as a unique chrome molding, leather interiors, a unique exterior color and Ford’s latest infotainment technologies. In addition, buying a Vignale will confer the privileges of a special ownership experience that is said to include free car washes for the car’s lifetime. Customers will also have a single dealership contact to help them deal with product and service needs. The company will also hope that the Vignale label can enhance the appeal of cars like the Mondeo midsize saloon and the S-MAX MPV as it renews its European model line-up.
/>

We have a $17.66 price estimate for Ford , which is in line with the current market price.

Ford Trying to Revive Its European Business

However, this is not the first time Ford has tried to penetrate the European luxury car market. In the past, the company has tried to enter the market through acquisitions of the Volvo and Jaguar brands, both of which it ended up divesting after failing to raise sales numbers. Ford has as many as 2,400 dealerships throughout Europe but the sovereign debt-crisis plunged the company’s operations in the region into severe doubt and uncertainty. Rising public debt and worsening unemployment meant that the European car market fared poorly for much of the last 5-7 years, affecting the company’s profitability. Between 2007 and 2012, Ford’s sales in Europe fell by 20%. As a result, the company had to re-configure its operations in the region. This involved the closure of many facilities, elimination of much of its workforce and a reduction of capacity by around 20%, in addition to having to replenish its car line-up in the region.
/>

The move into the luxury car segment comes as Ford’s business in the region is finally beginning to pick up. During the previous quarter’s earnings call, the management confirmed the company is on track to break even by 2015. Research firm IHS estimates that the introduction of 25 new or upgraded models by 2017 in Europe should be enough to raise sales by around 25%, that is to 1.65 million units by 2020. In addition to the new Vignale line, Ford will also start selling its iconic Mustang Sports Car in Europe next year and might also introduce the Lincoln brand at a later stage. However, gains in the region are going to have to be won the hard way since competitors like Peugeot, Renault, Fiat are also upscaling.
/>

Change In Strategy

This move signals a shift in Ford’s European strategy. The company is now looking to move cars at higher prices instead of focusing on volumes. The automaker is trying to increase the share of sales to retail and company-fleet buyers, who purchase cars at higher prices, while reducing the share of less profitable sales to rental-car companies. This might also come at the expense of market share. Ford’s passenger car share of the retail segment of the five major European markets was 8.3% in the first quarter, down 0.1% point from the same period last year. The lower share reflected adverse segmentation changes, offset partially by improved performance for Fiesta and Kuga. The company emphasized that it plans to focus on the quality of its market share and sales channel mix, to achieve a higher share of the fleet segment in the Q&A following the earnings announcement. 
/>

Additionally, the way Ford markets its cars in Europe will change too. Vignale cars will be differentiated from other cars, even though they will be produced on the same production lines as the cheaper versions. Special customer lounges will be set up at 500 of its 2,400 dealerships in Europe, these will have exclusive rights to the Vignale label. The company has announced the end of its 21-year partnership with the UEFA Champions League. The UEFA Champions League is a soccer competition that is watched worldwide and gave the company plenty of visibility. It is estimated that the competition made the brand visible to 300 million TV and online viewers in over 200 countries. The company will now shift its focus to digital communication to sell the brand.
/>
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin .

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Your Parent Or Kid Moved In: Are You Covered?
A record 57 million Americans now live in multigenerational family households — double the number in 1980, according to a new Pew Research Center study. And I bet many of them have the wrong homeowner’s or renters...
 
 
Pandora Looks to Challenge Terrestrial Radio's Dominance in Cars
Pandora Media is one of the largest Internet radio providers in the U.S. with more than 75 million active users. While the company’s active user count has increased at a robust pace historically, it is likely to slow...
 
 
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over...
 
 
Volkswagen AG New Coverage: Trefis Price Estimate at $51
Volkswagen AG is the second largest automaker in the world behind Toyota and slightly ahead of GM, selling 9.72 million vehicles globally in 2013. Established in 1937, Volkswagen AG, along with its 340 subsidiary...
 
 
 

Latest from the Network

Kazakh volleyballer becomes new Internet sensation
Almaty, July 29 (IANS) It took just a few days for Sabina Altynbekova, an under-19 female volleyball player from Kazakhstan, to hit stardom. After some performances during a youth tournament in Taipei last week, the...
Read more on Sport Balla
 
Indian para-swimmer Gayakwad misses out on bronze
Glasgow, July 29 (IANS) Indian para-swimmer Sharath Gayakwad missed out on the men's 200-metre individual medley SM8 bronze finishing fourth in the final of the event at the Tollcross Swimming Centre here in the...
Read more on Sport Balla
 
Lens returns to French Ligue 1
Paris, July 29 (IANS) Lens football club were promoted to the top flight, French Ligue 1, after successfully appealing a ban on financial grounds. Lens were banned from the Ligue 1 after failing to produce the...
Read more on Sport Balla
 
Sharadha fails to qualify for women's 100m finals
Glasgow, July 29 (IANS) Indian athlete Narayana Sharadha failed to qualify for the women's 100 metres final at the Commonwealth Games here. The 27-year-old Chennai-born finished sixth out of seven competitors in the...
Read more on Sport Balla
 
Cleanliness, punctuality Modi's mantra: Chinese daily
Beijing, July 29 (IANS) New vigour is sweeping through Indian government offices after Narendra Modi became the prime minister with ministers conducting surprise checks to see if bureaucrats are in their seats in time...
Read more on Politics Balla
 
MH17 investigators fail to reach crash site
Canberra, July 29 (IANS) Australian and Dutch investigators have failed for a third consecutive day to reach the MH17 crash site because of fierce fighting between Ukrainian troops and pro-Russian separatists,...
Read more on Politics Balla
 
Indian nurses now caught in Libyan conflict
New Delhi, July 29 (IANS) In a near replay of the incidents in Iraq, a large number of Indian nurses are caught amid spiralling violence in Libya, where rival militias seek to control the capital's international...
Read more on Politics Balla
 
Audrina Patridge splits from boyfriend
Audrina Patridge has split from her boyfriend. The reality TV star and Australian BMX rider Corey Bohan have split for good after five years of dating and though they have parted ways previously, insiders don't believe...
Read more on Celebrity Balla
 
Robert Downey Jr. excited to shop for baby
Robert Downey Jr. can't wait to go shopping for his baby daughter. The 49-year-old actor and wife Susan Levin will welcome a little girl into the world in November and he is planning to shower the latest edition to his...
Read more on Celebrity Balla
 
Joe Manganiello struggled to understand Sofia's Colombian family
Joe Manganiello found it difficult to understand Sofia Vergara's Colombian family when she introduced them over the weekend. The 'Modern Family' actress and the 'True Blood' star, who started dating earlier this month,...
Read more on Celebrity Balla