Porsche’s recent retreat back into the familiar realm of combustion engines raised a question that has been increasingly troubling European car makers: what does premium stand for in an electrified, digital age?
For many automotive planners at the beginning of this decade, electrification was going to be the springboard into a high-tech future where premium customers would pay more for electric rocketships gilded with digital delights.
However, since those heady days of 2021-2022, the pace in that arena hasn't been set by the high-end European brands but by mainstream Chinese brands, who are selling the dream for a whole lot less.
“The definition of premium nowadays for the average consumer is starting to look much more fuzzy,” Andrew Bergbaum, global head of automotive for consultantcy AlixPartners, told Autocar.
“If you're not in the industry and you're presented with a car that has similar horsepower, similar driving style, similar tech and comfortable seats, and you're not brand-specific, you’re going ask yourself why you would spend €20,000-30,000 more for what essentially looks like a similar product."
The problem is most acute in China, where home-grown brands are muscling in on the largest market for European premiums and hurting their sales.
While car sales in China were up 10% in the first half of the year, BMW sales there were down 15%, Mercedes down 14%, Audi down 10%, JLR down 15% and Porsche down a painful 28%.
While their ICE products remain unchallenged, it’s very different when it comes to EVs.
“In the EV segment, Porsche was just way too expensive,” Patrick Hummel, lead automotive analyst at the bank UBS, told journalists on a recent call. “Chinese consumers don't really see the point of paying so much more for a Porsche.”
Lurking in one of the halls of the recent Munich motor show was the Chinese electric challenger the European premium brands all fear: the Xiaomi YU7, a high-tech, 780bhp, four-wheel-drive SUV that sells for the equivalent of £30,000 in its highest spec.
The new BMW iX3 unveiled at the show debuted cool technology like a car-width head-up display. However, 300 meters away in the same exhibition hall with the same panoramic display and much more beside was the YU7.
BMW has priced the iX3 from £58,755 in the UK. Its Chinese price has yet to be revealed, but the presence of the YU7 will surely knock it much lower.
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