hard knock life

Germany is being treated like an emerging market by BMW, Mercedes and Volkswagen

July 2, 2013
July 2, 2013

German automakers are thinking outside the box to counter the slumping sales of new models. Recession-weary Germans bought only 300,000 new cars in June, down 4.7% from the same month last year. In the first half of the year, registrations of new cars have fallen 8% compared to the same period last year. Car makers like BMW and Mercedes are responding with a strategy that has worked well for them in emerging markets like India: used cars.

To attract used-car customers, the German duo is offering the attractive leasing offers, quicker loan processing and extended warranties typical of new cars. The luxury carmakers promise the same customer service enjoyed by new car buyers, and even allow customers to exchange the car if it flops. The offer is attractive to mass market car buyers who are interested in a taste of luxury.

Lower-end car makers like Volkswagen are joining in. In April, the company set up a dedicated website to sell certified pre-owned cars. Volkswagen officials told Bloomberg that they are aiming to increase the number used-car financing contracts across Europe by 50% over the next five years.

The strategy is working. In 2012, about 6.9 million used cars were sold in Germany, more than the number of double new car sales. If the Eurozone crisis continues, Germany’s automakers will need to hustle up enough used cars to meet the surge in demand.

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