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Discount Battle: Courting Every Customer

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Discount Battle: Courting Every Customer
Discount Battle: Courting Every Customer

Video: Discount Battle: Courting Every Customer

Video: Discount Battle: Courting Every Customer
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The manufacturers are in a sales crisis. Accordingly, the carmakers vie for every customer with high discounts. But not everyone is happy about the high price reductions: the retailers' margins are depressed.

Double-digit discounts, free extras, free maintenance - the discount battle on the German car market was not as tough as it is now. Because sales are slacking in Europe, manufacturers and dealers are vying for their customers by all means. Experts speak of record discounts - but also of weaker carmakers being forced out of the market. Retailers are pressing the price reductions heavily on the margins.

Cutthroat competition has never been so tough

"Anyone who buys a car with a ten percent discount today is doing bad business," says car expert Ferdinand Dudenhöffer, head of the Center Automotive Research (CAR) at the University of Duisburg-Essen. "The discount and displacement competition in Germany has never been as tough as it is now." Manufacturers who have been reluctant to date have also been increasingly granting discounts.

"For dealers, however, high discounts mean reduced margins," says Stefan Bratzel from the Center for Automotive Management in Bergisch Gladbach. In his opinion, in order to secure the business in the long term, they should rely more on other enticement offers - such as free or cheaper maintenance only in the year after the scrapping premium.

ZDK: Competition is fueled

Ulrich Köster, spokesman for the Central Association of the German Motor Vehicle Industry (ZDK), says: "The fact is that the decline in new registrations is not easing the situation, but is fueling competition." Dealers registered more and more vehicles at short notice in order to then bring them to the market as daily registrations at high price discounts. According to the CAR study, the number of tactical registrations increased even for luxury vehicles such as the Audi A8 and the Porsche Panamera.

However, expert Bratzel warns against discounts that are too high: "The more I bring in discounts, the more I harm the brand." A car is degraded to a "junk product". It is a vicious circle for ailing carmaker such as Peugeot, Fiat or Opel. "They have an extremely difficult time at the moment because the brand is not pulling and they have massive sales problems," explains Bratzel.

Successful manufacturers such as Volkswagen and BMW have meanwhile benefited from their good image - and could gain further market share through price reductions. Expert Dudenhöffer sees it similarly: "In Europe it will be the case that the big and strong will push back the weak."

Because ailing carmakers fear for their existence, a violent dispute has already broken out between Europe's largest carmaker Volkswagen and the Italian manufacturer Fiat. Fiat boss Sergio Marchionne criticizes that Volkswagen is causing a “bloodbath” with a ruthless pricing policy and using the crisis to gain market share with aggressive discounts. According to Bratzel, the Wolfsburg-based pricing policy actually plays "a certain amount of market displacement". However, one cannot blame them for this, says the expert. "They want to maintain or expand their market share - those are legitimate goals." (dpa)

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