Small But Chic: Europe's Booming Premium Compact Car Sector

The success of the Audi A1 and Citroën DS3 has sparked automaker appetites, with Fiat and Peugeot set to join the fray.

Citroën's DS3 (cmonville)

GENEVA - Competition may already be fierce in the luxury small car sector, but things are only going to get tougher. After last year's wave of small cars, such as Audi's A1, Citroën's DS3 and new variants of the Mini, carmakers at the Geneva Motor Show have confirmed their confidence in the future of the high-end small car.

BMW has unveiled its new Minicar Rocketman concept, a three-seater only a few centimeters longer than the original Mini. The German carmaker has also given signs that it wants to follow Audi's example and launch a new BMW model, smaller that the present BMW 1 Series.

It will then not come as a surprise that Mercedes shows the same appetite for the small car market. "We are going to replace our A and B segment cars with two new different variants', Dieter Zetsche, Chairman of Daimler AG has said. Audi officials have already promised new variants to the A1, in addition to the five-door model, the coupe and the four-wheel-drive option.

And the list of carmakers interested in manufacturing luxury small cars does not end there. The Fiat 500 is expected to soon hatch an entire family, including SUVs and station wagons. Ford has been closely watching Citroën's DS3, and Peugeot has no intention of allowing its sister brand to reap all the benefits.

"There has been a real break from the past: top of the range vehicles no longer come only as big sedans with powerful engines', said Vincent Rambaud, CEO of Peugeot. "This is a great opportunity for us to create new, reasonably priced vehicles." Peugeot's concept HR1 car presented last year at the Paris Motor Show, slated to reach the market in two or three year's time, is clearly part of the strategy.

But is the market big enough for everyone to play? "The sector has grown under the influence of demand. With each new small car entering the market, it is getting bigger," says Thomas d'Haussy, a Citroën official. In Europe, the luxury small car market grew from 520,000 to 554,000 cars sold between 2007 and 2010, according to J.D. Power. Latecomers have had no difficulty in finding customers. According to Peter Schwarzenbauer, sales manager for Audi, "we expect to sell 120,000 A1 models this year, 20,000 more than we first expected". The DS3 has also seen a hefty 76,000 orders since it was launched a year ago.

Ian Robertson, sales and marketing director at BMW, says the new competitors do not scare him a bit. He is confident that the "top of the range market will grow faster than the rest. Small car sales will progress faster than sedan sales. We strongly believe in the potential of premium small cars."

More models could also mean a risk of cannibalization. Half of the people who bought the DS3, for example, already had a Citroën. The alternative for them was to buy either a Mini or a fully equipped C3. Thomas d'Haussy says that he has not seen any signs of cannibalization: "The DS line actually helps us maintain our clients, who would otherwise have chosen a luxury car".

Read the original article in French

LES ECHOS

France's top business daily, Les Echos covers domestic and international economic, financial and markets news. Founded in 1908, the newspaper has been the property of French luxury good conglomerate LVMH (Moet Hennessy - Louis Vuitton) since 2007.

LES ECHOS

Economy

France

Small But Chic: Europe's Booming Premium Compact Car Sector

The success of the Audi A1 and Citroën DS3 has sparked automaker appetites, with Fiat and Peugeot set to join the fray.

Citroën's DS3 (cmonville)

Read the original article in French

LES ECHOS

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

FOCUS: Russia-Ukraine War

negotiations

Finally Time For Negotiations? Russia And Ukraine Have The Exact Same Answer

The war in Ukraine appears to have reached a stalemate, with neither side able to make significant progress on the battlefield. A number of Western experts and politicians are now pushing for negotiations. But the irreconcilable positions of both the Russian and Ukrainian sides make such negotiations tricky, if not impossible.

photo of : Ukrainian President Volodymyr Zelensky, left, presents a battle flag to a soldier as he kisses it

Ukrainian President Volodymyr Zelensky presents a battle flag to a soldier at the Kyiv Fortress, October 1, 2023.

Ukraine Presidency/Ukrainian Pre/Planet Pix via ZUMA

Yuri Fedorov

-Analysis-

The Russian-Ukrainian war appears to have reached a strategic impasse — a veritable stalemate. Neither side is in a position at this point to achieve a fundamental change on the ground in their favor. Inevitably, this has triggered no shortage of analysts and politicians saying it's time for negotiations.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

These conversations especially intensified after the results of the summer-autumn counteroffensive were analyzed by the Commander-in-Chief of the Armed Forces of Ukraine, Valerii Zaluzhny, with not very optimistic details.

Though there are advances of the Ukrainian army, it is mostly “stuck in minefields under attacks from Russian artillery and drones,” and there is a increasing prospect of trench warfare that “could drag on for years and exhaust the Ukrainian state.”

Zaluzhny concluded: “Russia should not be underestimated. It suffered heavy losses and used up a lot of ammunition, but it will have an advantage in weapons, equipment, missiles and ammunition for a long time," he said. "Our NATO partners are also dramatically increasing their production capacity, but this requires at least a year, and in some cases, such as aircraft and control systems, two years.”

For the Ukrainian army to truly succeed, it needs air superiority, highly effective electronic and counter-battery warfare, new technologies for mining and crossing minefields, and the ability to mobilize and train more reserves.

China and most countries of the so-called global South have expressed their support for negotiations between Russia and Ukraine. Meanwhile in the West, certain influential voices are pushing for negotiations, guided by a purely pragmatic principle that if military victory is impossible, it is necessary to move on to diplomacy.

The position of the allies is crucial: Ukraine’s ability to fight a long war of attrition and eventually change the situation at the front in its favor depends on the military, economic and political support of the West. And this support, at least on the scale necessary for victory, is not guaranteed.

Still, the question of negotiations is no less complicated, as the positions of Russia and Ukraine today are so irreconcilable that it is difficult to imagine productive negotiations.