Niche Cars On The Rise

MotorTrader March 10, 2016Latest News

Mercedes-Benz GLA crossoverNiche Cars On The Rise As Recession Wanes

The world economy is still on an unnerving curve with nations all experiencing either growth, stagnation or still stuck in recession. This has an obvious effect on consumerism and the ability for businesses to gauge profits from new product lines or in the case of car manufacturing, new car models.

In the last seven years, the duration of the current global downturn, car manufacturing has centred on mass production of cars that will be popular. However as America and the UK starts to show positive figures and car sales increase across the board, this has enabled the likes of Porsche and BMW to begin the production of more niche offerings for general sale.

The upside of designing cars for mass production is all the parts are the same, profits can be projected clearly and the amount of money earned on the production of individual car parts, accessories and options is higher when ordered in bulk.

The Niche Car Model Sector, Lower Sales And More Risk

As households and individuals begin to have a more stable outlook financially and can save a little, then it is perceived the population can spend a little more on desirable extras. Additional items that otherwise would be unaffordable or unthinkable when being put on the credit card or on finance long term.

With the opportunity to gain from rising incomes, car manufacturers can start to release models they have held back. The result is niche cars with extensive options, lower car parts ordering and lower profitability but an assessed risk that should still return a profit even if only 100,000 models are sold globally or in an internal market.

This is great news for the uk motor trade industry as well as people looking to buy a new car. It not only releases new technology – which in itself can be a risk but it also guarantees jobs in the motortrade, sees more employed and overall a more colourful car market to buy into. With consumers able to buy what they actually desire, rather than just what manufacturers can afford to build to make an immediate profit.

Service And Satisfaction Against Profit And Loss

In short, the recession waning and consumer confidence is seeping back through to business who now wish to return to a more service orientated mode over the general need for income only.

This is no more evident than at the annual Los Angeles Auto Show this month. With Mercedes-Benz showcasing its new GLA crossover SUV, GM with their new Chevrolet Colorado and BMW going to market with a third generation and even more niche Mini Cooper on a revolutionary UKL platform.

Investment by car manufacturers into the niche sector, usually sees those new additions go mainstream thanks to their use driving down parts costs and servicing. Fuel cells will be used in more new models and rather than mass models going into production with options, cars will go to market WITH options as standard.

Jessica Caldwell, an analyst at Edmunds.com said “I like to think of this year’s L.A. Auto Show as the ‘Jumbo Shrimp Show’ because a lot of the smaller automakers are making a big splash, while the larger automakers are highlighting more of their fringe products,”

This is how the luxury market will come to middle class England in 2014 and 2015. More niche car models for the average working man to spend a little more money on at the outset. It could be said that the feel good factor of a growth economy translates into wider use of technologies and more people willing to spend out on them.

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