Europe: a new segment is born

Europeans love hatchbacks for the starting segments: A, B and C. It has been a constant during the last 20 years when this kind of body has become the most popular in the continent. All car makers offer a hatchback, premium Germans included, and VW Golf 3/5 door hatchback has ruled for a long. But cars as other goods depend a lot on the way economy goes. The last 3 years have been difficult for European car market, and it seems it will last for other 3 or 4 more, and car makers are changing their future plans in order to maintain their positions in the market. Part of this strategy is to understand consumer’s behavior  in a difficult period like this, and offer the right product for the right time. Western Europeans are now looking for sedans in these segments, something that was not even considered by a lot of carmakers as their offer was limited by hatchbacks body. The crisis might had an effect on what some Europeans are looking for in a car as their income has decreased, and their future is quite well uncertain. Now they want less prices and more roomminess and only a sedan can offer it.

Therefore the segment of B and C segment sedans could be arriving to West Europe because of the latest announces of important car makers such as PSA and VW. This segment is more known in emerging countries where most of buyers look for a small-medium cheap sedan with independent trunk. Fiat Linea or Siena/Albea, or VW Voyage, Suzuki D-Zire and some others have been offered in Brazil, Turkey, India and some other important markets but never in Europe. This week, though, VW showed the first images of their new B/C-segment sedans: the Skoda Rapid and Seat Toledo, while PSA did the same with their 301 and C-Elysée. In fact is not easy to positionate them in a specific segment, as their measures are long but their prices won’t be high: the Rapid should be located between the B-segment Fabia and C-segment Octavia, while the new Toledo would be between the Ibiza and Leon. Peugeot has said that its 301 will be the cheap version of 308, which is C-segment, but in reality it looks more like a 208 sedan. Anyway, these 2 Europeans car makers realized that people may be wanting other kind of car in this period. It is why this new sub-segment may be rising only in Western Europe, though the big part of sales is abroad.

Fiat, a strong player in low segments lacks of an interesting sedan. In some European markets, like Spain and Greece they already offer the Linea, the sedan version of Punto produced in Turkey, where it is the best selling car. But sales numbers of this large sedan (4.44 m) has not been good in the rest of the continent. The car is really cheap and big inside, with an enormous trunk but very small engines and poor quality. The car is not even offered in Italy as people don’t like it, but what if Germans and French are successful with their new small sedans? Fiat should repositionate this model and offer it with better engines and quality and at the same time make useful the advantage of producing it in a country with lower labor costs than Western Europe. The car could have interesting numbers if they change the way the sell it and offer a medium sedan with great roominess, and add the latest engines Fiat has developed in Italy. Time will show how right were Germans and French by offering these new cars and how wrong was Fiat not making useful of this interesting sedan.