Price cuts push 1000 per cent sales boom

As the Australian car sales race heads into the final quarter lap for 2013, most eyes are on what will be the top car. But further back in the field, there’s been a big improvement for several European models, which are posting sales lifts of up to 1000 per cent as a result of aggressive price cuts.

Leading the charge is Fiat’s 500 which was slashed more than $10,000 in June, and now starts at just $14,000. This resulted in 310 buyers last month, compared to just 86 before the price drop. The little Italian car has increased in sales at the rate of 850 per cent every month since June, in a market that shrank by almost 15 per cent.

Fiat as a whole is benefiting too, with the 1765 sales so far this year being more than a 500 per cent increase over the 328 at this stage in 2012. While the Fiat 500 is attracting customers, established competitors like the Holden Barina, Nissan Micra, Suzuki Alto and Swift and Toyota Yaris have meanwhile seen a decline in sales year-to-date.

This means that for the first time, the 500 is outselling more than half its competitors. Meanwhile, Alfa Romeo’s small models, which also received price cuts recently, have returned positive results – albeit on fairly low numbers. MiTo has doubled in sales in the premium light car segment from 23 to 45, while its larger sibling, Giulietta – in a field that includes the Toyota Corolla, Holden Cruze and Mazda 3, found 324 new homes compared to just 88 before the new pricing strategy.

The local HQ says the surge in sales is due to sharper pricing and specifications and more dealership support. “The success is a result of a combination of factors: an expanded and engaged dealer network, streamlined vehicle spec levels and sharper pricing – as well as strong and smart marketing support,” Fiat and Alfa Romeo spokesperson Karla Leach says.

With the international launch of the new Alfa Romeo 4C sport car this week – estimated to cost somewhere around $75,000 when it arrives here -- the Italian brand is buckling up for the challenge of luring customers with a few more dollars to spend. Leach says Fiat and Alfa Romeo have serious intentions to keep strengthening their position here. “We have strong ambition for the continued growth of these brands in Australia,” she says. But it’s not just Italians aggressively tackling the entry level market.

Renault last month introduced the cheapest Clio ever, firmly cementing the French brand into the budget light car segment with an entry-level price of under $17,000. Keen to be seen as a viable alternative, Renault has hit hard at competitors, offering five-year, unlimited kilometre warranty and fixed price servicing. Renault Australia managing director Justin Hocevar said at the Clio unveiling last month that the brand has high expectations of the car.

“We have a fantastic value proposition in terms of a beautifully designed vehicle with high levels of personalisation, at an extremely competitive price.” he said. Traditional options like Mazda, Hyundai and Toyota still dominate the light and small car segments, but European rivals are fighting hard to gain credibility as mainstream brands.

The big winners are the buyers, who may now afford to consider Italian design, French flair or German precision for the same price as more established mainstream manufacturers. The exception to the success story is Opel, which failed to accrue enough buyers in its very short stint in Australia. Despite competitive prices, the German brand disappeared in August, posting less than 1,000 sales this year between the Astra and Corsa small cars combined.