The Start of Something Big?
An executive decision in early 2005 could be a tough one, with the number of new offerings in the large car market starting to explode
By Leow Ju-Len
THE NEXT BIG thing in the motor trade could literally be something big. 2005 kicked off with a string of launches for large cars and executive models, and dealers are set to keep them coming over the next few months.
The good news for buyers? There’ll be no shortage of variety in the market, with the new exec car contenders arriving in all sizes and fit for all budgets. In addition to familiar nameplates revisited, there are new faces to look forward to, and the Category B COE (for cars above 1.6-litres) segment is swiftly becoming increasingly crowded with tempting new offerings.
In fact, big cars have been steadily gaining prominence here for years. In the last half decade, the market for Category A cars (1.6-litres and below) has actually declined 3.4 percent from 268,826
cars sold in 1999 to 258,639 last year.
Over the same period, however, buyers have been sizing up their choices, sending the Cat B market skyrocketing from 114,115 to 158,464 units per year! That’s a 38.9 percent gain, which shows just how fast the Singaporean appetite for larger cars is growing.
VOLKSWAGEN’S LUXURY CHALLENGER
That growing appetite is certainly something Volkswagen is hoping to feed. The German automaker best-known for churning out mass-market machinery to a discerning populace accustomed to speeding along the autobahn has just launched the Phaeton, its largest, plushest and most complicated sedan to date.
The biggest Volkswagen is clearly aimed at the biggest Mercedes-Benz, with every inch of the Phaeton designed to steal sales from the S-Class. Some of the high-tech weapons in its arsenal include adjustable suspension to alter its ride between sporty and velvety, and gust-free air-conditioning that wafts cool air into the cabin through hundreds of tiny holes.
It also has options like power-adjustable massage chairs in the rear and a four-seater configuration with business class-style seating behind. Plus we get the biggest of the biggest – Singapore is a long wheelbase-only market for the Phaeton, with a 12-centimetre extension in the body for our towkays to stretch their legs.
Tempted? Volkswagen hopes to sell 80 to 100 of these luxury limos a year here, and while the Phaeton’s listed price of $259,900 with COE (and a $20,000 overtrade) isn’t exactly chump change, the car is priced competitively enough to offer full-bodied German luxury at a lower price per-square-foot than any of its rivals.
The challenge is really whether the car buying public is ready to accept the idea of a quarter million-dollar Volkswagen. In some ways though, it already has. Arguably, Volkswagen has played it shrewdly here by first launching the Touareg, a luxury Sports Utility Vehicle, thus laying the groundwork for the Phaeton to follow at a similar price point. The success of the former could whet appetites for the latter.
TOYOTA FOR LEXUS MONEY
A similar conundrum, with no such reassuring precedent, confronts the staff at Toyota importer Borneo Motors. There, the big question is whether people would be willing to pay Lexus money for a Toyota.
Another of the large, luxury offerings recently launched is the Toyota Crown, which represents the best efforts of the brand that has sat at the number one spot of the local car market for years.
That’s more of a hindrance than an advantage, however. The problem is, while buyers could be expected to climb the ladder from an entry-level Toyota Vios to the ubiquitous Corolla Altis, and then perhaps from there to the spacious, deluxe Camry, the progression usually stops there.
Up until the Crown’s launch, the only way to buy a more expensive Toyota than a Camry was to jump into a Multi Purpose Vehicle (MPV) and opt for a Previa. But even that has been a small seller with just 142 finding owners last year.
So what are the chances for the Crown, a $182,888 luxury sedan from a brand that has never been a big player at that sort of price point? You might think they were pretty good, given that Toyota’s expertise with user-friendliness and quality build means its flagship is a comfortable, refined car packed with power and features that pamper.
LEXUS FOR TOYOTA MONEY
Nevertheless, the Crown’s closest competition could actually come from an in-house rival, with the launch in March of the Lexus GS300.
Lexus, the luxury brand owned by Toyota, is also handled by Borneo Motors (although the two divisions’ sales and marketing operations are run independently), and teaser ad campaigns for the new GS300 have already been running in the local media.
At $179,888, the new GS300 is priced head-to-head against Toyota’s Crown. Their rivalry is all the more acute given that the two cars share the same engine and are built off the same platform (the major underpinnings which determine the basic architecture of a car).
The arrival of the latest generation of the GS line could provide a timely boost for Lexus’ answer to the BMW 5 Series. Last year, the previous model accounted for just 3.6 percent of all Lexus sales. That was achieved as its six-year lifespan came to an end, so with an all-new model, we should see a rebound in GS300 sales.
Borneo’s Lexus division has always provided the higher ladder for Toyota customers to jump onto once they had traded all the way up to a Camry, with a model family that stretches between $121,888 for the IS200 compact executive and $301,888 for the LS430 luxury limo.
The Lexus line-up has done well too, with 1,602 units sold in 2004, enough to sneak into the top 10 of the Singapore sales chart, and a respectable half of Mercedes-Benz sales. So a new offering like the Toyota Crown doesn’t exactly fill a gaping hole in Borneo’s overall line-up, but… well, why not? Whichever of the Crown/GS300 siblings does well, it’s Borneo who reaps the spoils.
LESS IS MORE FOR BMW
The Lexus GS300 isn’t the only car to bring new shine to an old name. BMW’s most important model family, the compact 3 Series line-up, is due for an overhaul with an all-new car doing the duties.
In contrast with the overall emphasis on size, BMW’s 3 Series has been a large hit with yuppies despite not having a large bodyshell. The 3 may be smaller and more expensive than other exec stalwarts like Honda’s Accord or the Camry, but it’s helped by a sporty drive and the allure of its prestige branding.
Like the new GS300, the all-new 3 Series replaces a long-serving model. The smallest BMW sedan went out with a bang after a six-year run. In 2004, 3 Series sedans found homes with 1,046 buyers, accounting for 35.9 percent of all of BMW’s volume.
That suggests two things. First, the new 3 Series has a heavy responsibility as a volume generator for BMW. Second, given the momentum of the out-going model, the new 3 Series could drive BMW sales to new highs. The German marque already had its best year in Singapore in 2004, with sales of 2,915 units, after all.
While no one in the car business disputes the first point, the new 3 Series may not provide the sales boost that BMW might be hoping for here. At least, not yet.
That’s got nothing to do with ability, since all indications are that the new 3 is another outstanding effort from BMW (see ‘BMW Climbs To The Top Of The Three’, Page 8), but rather model availability. Sales for any model range tend to be supported from the bottom up, but the cheapest 3 Series is also likely to be the last one launched.
The first models to hit showrooms will be 320i, 325i and 330i variants. The new 318i will be the least powerful but the most affordable model, but it may not arrive until early next year. And it’s the 318i which propped up 3 Series sales here last year, accounting for a whopping 87.6 percent of 3 Series sedan sales, or 31.4 percent of BMW’s total volume.
As crucial as the next generation of BMW’s smallest saloon is going to be, the star performer of the family won’t be here for some time.
LATE DEBUT FOR AUDI’S 3 SERIES CHALLENGER
Arch-rival Audi is planning to launch a revised version of the A4, the company’s direct 3 Series competitor. The new A4 has been given more aggressive styling and retuned suspension for sportier handling, which is meant to hit the 3 Series where it counts.
The good news for BMW? After a planned roll-out around March – ahead of BMW’s late-March launch, late-April delivery schedule for the new 3 Series – the new A4 has been delayed. It will only arrive late May, says Audi importer Premium Automobiles. Too late to spoil BMW’s introduction of the new 3, in other words.
HYUNDAI QUIETLY MUSCLES IN
It’s not a given that the Germans and Japanese are the only ones entitled to battle it out for the executive dollar, however. At the lower end of the market, Korea’s Hyundai is quietly fielding the all-new Sonata, a $83,888 offering designed to provide Toyota Camry comfort for less money.
That’s a lofty target – the Camry rules the local large saloon market, and was the best-selling car in the all-important US market last year – but Hyundai is clearly on a roll, clinching 2004’s number two spot in local sales, with 13,804 units sold.
Another reason to be bullish on the new Sonata: the previous-shape model generated 1,798 sales in its final year, despite being discontinued in October. That’s still less than half of the Camry’s tally, but it should be interesting to see if the new car will be able to bite off a bigger chunk of the executive pie.
CarBuyer’s testers say it’s quiet, roomy and well-built, and no longer feels like upsized budget transportation but like genuine managerial transport. So perhaps the Sonata will prove to be another of Hyundai’s hits after all.
In any case, the Sonata’s presence in the market completes the executive car picture in a crucial way, by bringing access to relatively luxurious transport to a wider field of yuppies and managers.
Wherever you stand on the corporate ladder, in other words, there’s an executive car out there for you, or if you like your cars large, you’re effectively spoiled for choice, especially since 2005’s car launches have started with a big bang.
THE BIG SHOW: BMW VS MERCEDES-BENZ
2005 MAY BE getting crowded with executive car launches, but further down the horizon is when the industry’s real big guns come out blazing. At the very top of the luxury car market, giants rule.
Mercedes-Benz and BMW lead the market with the S-Class and 7 Series respectively. These cars generated sales of 539 and 526 units in 2004, and are so far ahead of the pack that their nearest competition, the Lexus LS430, trailed behind with just 141 sales.
What’s exciting is that new versions of these two heavyweights are on the way. Come September, Mercedes-Benz will show its all-new S-Class at the Frankfurt Motor Show, and though official pictures of the car have not been released, DaimlerChrysler insiders are excited about it.
“It’s beautiful,” according to a source who has seen the new S-Class. “The rear end is like the Maybach’s, and the front is really sporty. It’s almost too sporty, if you ask me!”
Maybach is DaimlerChrysler’s Rolls-Royce-challenging super-luxury brand.
BMW, for its part, is only rolling out a mid-life revamp of the 7 Series flagship, with new styling and new engines to keep things fresh. A lot is riding on the facelifted 7 Series, not just because it has to withstand the challenge of a new Mercedes-Benz S-Class, but because sales are in a slump.
Worldwide 7 Series sales fell from around 57,900 units in 2003 to approximately 47,700 in 2004, a drop of 17.6 percent. In other words, 7 Series sales will have to jump 21.4 percent in 2005 just to get back to where they were two years ago.
That’s a tall order for any new car, even if it is a giant of the industry.
