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 .

 
 
 

<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

Ford Plans to Tap Africa, Middle East Market
Ford Motors has outlined an aggressive plan to accelerate the activities of its newest business unit, the Middle East and Africa. Leveraging its One Ford Global Portfolio, the company will launch at least 25 new...
 
 
Arizona Execution: Botched, or Predictable?
Arizona Execution: Botched, or Predictable?
My Facebook stream was alight last evening in the wake of Arizona’s two-hour execution of Joseph Rudolph Wood at the Arizona Prison Complex in Florence. Wood was sentenced to execution by lethal injection in 1991 for...
 
 
GM Profit Plunges On Recall Costs; $400 Million Set Aside For Victims
General Motors'  net profit in the second quarter was all but wiped out by the cost of recall-related repairs as the automaker sought to put the financial impact of a devastating safety issue behind it. GM earned $200...
 
 
'Angry Birds Transformers' Trailer Shows Toys In Action
'Angry Birds Transformers' Trailer Shows Toys In Action
Having had information about the toy robots and cars for Angry Birds Transformers I have been looking forward to seeing what the game looks like in practice. Today we got a step closer as Rovio released a game-play...
 
 
 

Latest from the Network

Commonwealth Games Day 1 medal standings
Glasgow, July 25 (IANS) England led the medal standings at the end of first day of the 20th Commonwealth Games followed by Australia and hosts Scotland. India was at the fourth position with two golds, three silvers...
Read more on Sport Balla
 
CWG 2014: Indian shuttlers outclass Uganda
Glasgow, July 25 (IANS) Indian shuttlers registered their second successive win in Group B of Commonwealth Games 2014 by defeating Uganda 5-0 in the mixed team event at the Emirates Arena here Thursday. World...
Read more on Sport Balla
 
China's yuan weakens
Beijing, July 25 (IANS) The value of the Chinese currency renminbi, or the yuan, weakened by 18 basis points to 6.1597 against the US dollar in its central parity Friday, authorities said. In China's foreign exchange...
Read more on Business Balla
 
Poland cancels cultural project with Russia
Warsaw, July 25 (IANS) The Polish government Thursday announced that it has cancelled plans for celebrating Poland Year in Russia and Russia Year in Poland, a cultural project planned for 2015. "The decision was taken...
Read more on Celebrity Balla
 
Bieber bags Calvin Klein endorsement deal
Los Angeles, July 25 (IANS) Singer Justin Bieber's has landed an endorsement deal with Calvin Klein (CK) and shot a campaign for the brand's underwear range. The 20-year-old joins the ranks of supermodels Kate Moss...
Read more on Celebrity Balla
 
US House panel supports lawsuit against Obama
Washington, July 25 (IANS) The US House Rules Committee Thursday approved a resolution allowing the full House to vote on authorising a lawsuit against US President Barack Obama, accusing him of abusing executive...
Read more on Politics Balla
 
Algeria confirms missing aircraft crashed in Mali
Algiers, July 25 (IANS) Algeria Thursday confirmed that the missing flight AH 5017 of Air Algeria with 116 people on board crashed in Mali, media reports said. "We can confirm that the plane crashed in Malian...
Read more on Politics Balla
 
Tori hopes to discuss relationship issues with kids
Los Angeles, July 25 (IANS) Actress Tori Spelling she hopes to one day have a "candid" with her children about problems in her married life so that they can understand the nuances of a relationship. She was devastated...
Read more on Celebrity Balla
 
Kaka set for Sao Paulo return after 11 years
Rio de Janeiro, July 25 (IANS) Kaka is set to make his long awaited return for Sao Paulo Sunday, 11 years after his last appearance for the Brazilian club. The 32-year-old, who joined his former side on a six-month...
Read more on Sport Balla
 
Chris Pratt's wife to 'fatten' him up
Chris Pratt's wife is trying to ''fatten'' him up. The 35-year-old hunk dropped more than 60lbs in just six months for his role in 'Guardians of the Galaxy' but now that filming has wrapped up, he admits his spouse...
Read more on Celebrity Balla