I used wrong term "principles", meaning was since the volume of a model is very low than drop that model in a geographic macro area.
The two Wrangler model example was since sales have been always low in Europe, but Wrangler has a marketing value. But for sure the cost associated to have a diesel engine inline with emission rules in European Union was for sure not low cost.
Also other models, always with their diesel engines, had very low registration numbers.
The KPMG study was to show that the most "penalized" market in the future, that is not so far for a manufacturer since cycle of life of a new model is not so short, will the the "sedans".
KPMG forecasts is that the number of manufacturers that will manufacture that "appliance sedans" will be few.
note: I wrote "appliance sedans" since are the generic sedans that are bought only because customer needs it for transportation, with very few or no emotional implication of the desire of owning such vehicle (= they drive because they have to, not because they like driving).
The other part that is also in KPMG study, or in others, is that automotive scenario will change since "new" markets will appear or increase greatly their volume of incomes.
Also actors of the next automotive market, better to say transportation market, will increase in number and will arrive from other industries.
In many situation actual automotive manufacturers will see at least a part of their business to shift from being end point to "private customers" (B2C) to a position of suppliers of other companies (B2B), a position that most manufacturer doesn't like at all (and that position that even be worst than the actual sales to "fleet" customers).
KPMG forecast the reduction of "sedans" volume from 5.4 to 2.1 million by 2030.
Some possible effects on "sedans" market volume reduction (each point could happen or not because other points):
- average price of sedans, without increase due to emissions and/or safety rules, will increase (amortization costs will be higher per unit)
- some actors (manufacturers) will leave the "sedans" market, the fewer bigger ones can maintain volumes and their actual structure of costs
- fewer manufacturers continue sedan production in their plants at actual volumes, other manufacturer sedans drop their production of sedans, but are supplied by other manufacturers
- no "traditional" manufacturer continue "sedans" production, very few suppliers start manufacturing "appliance sedans" for "traditional" automotive manufacturers and the companies that offer "transportation" services.
I hear you. And I don’t dispute KPMG’s findings. But KPMG is not an automaker.
In its simplest terms, the job of an automaker is to uncover consumers’ unmet needs and develop a vehicle that gives it to them.
Over the years I heard auto clients tell me things like “the 2-door coupe is dead”, “the minivan is dead”, “RWD is dead”, “the V8 engine is dead”, etc. And every time, KPMG, or some other prestigious consultancy, had a million-dollar study telling them they were right. Until some astute automaker would figure out what consumers really wanted, and seemingly come out of nowhere and give consumers precisely what they wanted.
The 2-door coupe was dead until Ford came up with the 2005 Mustang. That car was such a hit that it singlehandedly turned around those segment’s fortunes, forcing Dodge and Chevrolet to respond. Now even Toyota is looking to bring back the Supra, after having given up on coupes for decades.
The minivan has been given for dead since I can remember. I have to give credit to both Chrysler and Honda for sticking to it and trying real hard to figure out how to revive the category. It looks promising, but it is not out of the woods yet. Meanwhile, Toyota appears content letting Honda and Chrysler figure it out, and keeping its toes in the segment with Sienna.
The RWD non-luxury sedan was dead until Chrysler launched the 2005 300. That car launch singlehandedly TRIPLED purchase intentions for the entire Chrysler brand over a six month period. This accomplishment is simply unheard of in this business. Chrysler scored such a homerun, that both GM and Ford were forced to explore bringing back their own RWD sedans, and others like Acura and Nissan to pay attention. The wholeness of 300’s original design speaks for itself today by still selling in decent numbers despite the cold shoulder it continues to get from FCA.
The V8 engine has been written off too many times to count. More recently, positioning the 5.7 V8 as a HEMI was another marketing coup, and mating it to the Chrysler 300 —and later Dodge Charger and Challenger— was simply a stroke of brilliance.
In my opinion, the old Chrysler Corporation had a knack for pulling these unexpected tricks more regularly. But regardless, even if Marchionne didn’t want to spend his organization’s resources tied up uncovering sedan consumers’ unmet needs and wants, it should have stayed in the game until Toyota, Honda or GM did. Because that’s precisely what Toyota and Honda are doing right now, and is only a matter of time until someone does.
The problem for FCA is, once someone else figures out what sedan owners
really want, they will reward
that automaker just like they reward Chrysler with Pacifica and, still, with 300. But at that point, FCA will be late to the party by many years. Because even if it scrambles at the last minute to bring a foreign-made Fiat with a Chrysler grille, in the interim years it already lost HUNDREDS OF THOUSANDS of sedan owners who went to the competition, and don’t give a hoot anymore about Chrysler...or Dodge...or Fiat.