Stars Align to Boost U.S.-Market Fortunes of European OEMs

Timely product launches, aggressive pricing strategies, growing consumer confidence and favorable competitive conditions helped European auto makers achieve a U.S.-market milestone in October, industry experts say.

European brands accounted for a 10.0% share, their highest share ever and an increase of 1.7 points over like-2010, according to WardsAuto data.

Volvo S60 October sales total nearly eight times prior-year tally.

Their 101,406-unit sales total was a 27.6% jump from like-2010, outpacing the 13.1% surge by North American OEMs, a 7.1% bounce by Asian OEMs and the industry’s 11.6% gain.

What market forces were in play?

“When you have luxury buyers of Audi, Mercedes and BMW who feel secure enough today to purchase a new vehicle – they didn’t feel as strongly a year or so ago – combined with strong entry-level product that had the right value equation for U.S. buyers, we get the sales results we saw last month,” says Alexander Edwards, president of California-based consultancy, Strategic Vision.

Mercedes-Benz USA is cautious when assessing consumer confidence. While the overall trend is upward, “it seems to ebb and flow,” says Mike Slagter, vice president-sales.

Prevailing theory poses that luxury-vehicle buyers are more insulated from economic downturns. “This recession was clearly different,” Slagter says of the plunge that stunned the global auto industry in 2009.

“Whether you were mainstream automotive or luxury-segment, you experienced some pretty severe impacts on your sales,” he says.

However, October “brought more faces new to the brand than ever before.” Mercedes recorded a 31.3% sales surge, compared with like-2010 and adjusted for selling days.

“We’re doing very, very well against Lexus,” Slagter says of Toyota’s luxury-vehicle line.

The previous U.S. share peak for European auto makers was 9.8%, which was recorded in June, just as perennial sales-giant Toyota was rushing head-long into an inventory crisis.

Some European OEMs benefited from the dearth of choice on their competitors’ lots. In Volkswagen’s case, “there’s no question,” says Frank Trivieri, Volkswagen of America vice president-sales.

But he maintains the auto maker’s bid to ratchet up the value equation was a more significant contributor to VW’s October success. On a percentage basis, Volkswagen’s 44.9% sales gain led the industry.

The Passat once was among the priciest models of its kind on the market, Trivieri says. Today, not only is it all-new, it is priced within the range of more buyers.

Of 15 ’12-model Middle Cars for which pricing is cited in WardsAuto segmentation, only the Chrysler 200 and Dodge Avenger have lower base stickers than the Passat’s $20,072.

Though Trivieri and Slagter say consumers are enamored with “German engineering,” other European pedigrees also resonated. Sweden-based Volvo saw sales soar 27.3%.

Joe Sesi, dealer principal of Sesi Volvo in Ann Arbor, MI, says his store had a solid October. But it could have been better.

“We’ve been fighting inventory shortages,” Sesi tells WardsAuto, adding most customer clamor surrounds the Volvo S60.

Redesigned for ’11 and featuring a new 3.0L I-6 named one of Ward’s 10 Best Engines this year, S60 sales totaled 1,746 – nearly eight times prior-year’s tally of 208.

Against this backdrop, North American and Asian auto makers continued their dominance of the U.S. market. North American OEMs garnered a 45.8% share in October, up 0.6 points from like-2010, while the Asians captured 44.2%, down 1.9 points.

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