By Marion Trimborn Jul 13, 2005, 5:09 GMT
Frankfurt - The bargain-basement mentality in Germany has finally reached the automotive industry with car manufacturers trying to coax motorists on low budgets into buying new no-frills models.
Young families and students are the initial target customer groups for these cars which carry price tags of around 10,000 Euros (12,200 US dollars). Experts believe the cheap and cheerful new compacts will catch on fast and may even start a new trend in the land of premier marques such as Porsche, Mercedes-Benz and BMW.
"The rise in oil prices and a fall in incomes have made people in Germany more cost-conscious," said Albrecht Denninghoff of the Hypovereinsbank. Basic cars are no longer associated with motorists who cannot afford anything better but are considered practical, even trendy.
One of the most recent contenders is the Dacia Logan from Renault. Originally developed for eastern Europe - the brand name was used for decades in Romania - the car is a bare-bones model devoid of such creature comforts as electrically-operated windows and air- conditioning. They cost extra. The consigment of the model for France was completely sold out within the space of a week and Renault now hopes to sell 3,000 Logans a year in Germany.
"The Logan is a very, very good seller," said a Renault Germany spokesman. "It's designed for people who just need to travel from A to B and regard their car as a means to an end and not as a luxury." Nevertheless, some prospective purchasers may be put off by the Logan's poor showing in a crash test staged by Germany's leading car club, the ADAC.
It may not yet be the new "People's Car" but Volkswagen regards the basic version of its Fox sub-compact as a success. It sells for 9,000 Euros. Shortly after its introduction at the end of April the car shot to the top of its class in the registration statistics. According to German authorities, 1,764 examples of the Brazilian- built runabout were sold in May.
The carmakers see the budget versions as a way of stabilising sales in Germany where consumer confidence is at a record low. "It's the cheapest way of boosting market share," said Wolfgang Meinig, an automotive studies expert from Bamberg University. "Market share equates to image - and they will do anything to maintain that." At the same time margins are being squeezed more tightly than ever before. That boosts competition in the German market, making it harder to build cars at home and achieve a decent profit at the same time.
Professor Ferdinand Dudenhoeffer, a respected industry watcher from Gelsenkirchen, predicts that the new cheap cars will end up denting sales of more well-established models such as the Volkswagen Golf and the Opel Astra. "Average rebates being offered by dealers are already at an all-time low of 16 per cent," he points out. Overall car sales in Germany are expected to stagnate this year at 3.25 million in total.
Dudenhoeffer believes most of the growth this year will come from the budget models and he sees their share of the market almost doubling from 3.9 per cent to 7 per cent in 2006.
So far this year sales of existing small cars such as the Ford Ka, Fiat Panda and Smart Fortwo have actually lagged behind 2004 but the rush of new compacts is set to change that.
The Citroen C1, the Toyota Aygo and the Peugeot 107 - all share the same platform - go on sale in the next few weeks at prices which are bound to tip the scales in their favour. They cost between 8,400 and 8,950 Euros.
Your Talkback on this Story