America Ends Love Affair With European Autos

13 April 2004

European car manufacturers, ranging from BMW and Mercedes-Benz to the formerly impregnable Volkswagen, have seen their stateside sales sag in favor of Detroit and far-eastern rivals.

During the first quarter of 2004, sales of all European marques plunged 6.9%, while US domestic brands rose 2.2% and Asian autos soared 9.5%. The unkindest cut of all was experienced by Volkswagen, reports the Power Information Network, a unit of J D Power & Associates.

According to PIN, almost 40% of former VW owners who bought a car during Q1 switched allegiance to an Asian model; and slightly over 22% of quondam Mercedes drivers did likewise.

Says PIN's director of industry analysis Tom Libby: "Owners of every European brand are moving away from the brand." He believes a key factor is quality, citing a recent survey carried out by JDPA. This revealed that while quality of all auto brands has improved since 1998, European marques have made the least progress.

The trend is confirmed in an annual survey of owners by Consumer Report magazine. For the first time in twenty-four years, the average US-made car was rated more reliable than the average European car.

"It comes down to reliability," opines David Champion, head of the magazine's auto test center. "Reliability of European brands has taken a toll on sales."

Volkswagen says it has received the message loud and clear, having already appointed a fifty-strong team to hone the quality and reliability of Wolfsburg's output. "Our goal is to find the root cause of any quality issue and get it resolved within eight weeks or less," says VW's Tony Fouladpour.

But quality issues were not the main driver behind the marque's 25% year-on-year drop in Q1 sales. This, Fouladpour insists, had more to do with its sales rebates, relatively meager alongside the profligate generosity of the big three US brands.

Mercedes too has a ready explanation for its 5% sag in sales: a switchover to ten new models. Hypes Mercedes-Benz USA's vp for sales Keith May: "[These] will take us to another record year this year. Our biggest product offensive in history [is] coming in 2005 and 2006, which will take us forward from there."

Data sourced from: USA Today; additional content by WARC staff