20 billion euros in losses were incurred by brands with these 10 models

Every new launch means a substantial investment for the brand, taking into account the costs ranging from model design to distribution and manufacturing. But even with everything required to bring a new model to the street, there is then the most agonising wait of all: waiting for the model to sell and be successful enough to recover what has been invested in it.

According to a study carried out by financial analyst Max Warburton, over the last 15 years Daimler, Renault, VW and Fiat lost a combined 20 billion euros due to the failure of 10 vehicles. Warburton calculated the profit margin of each car at the time, as well as the development costs for each one, all with values updated to today. You will find the results after the jump.

The first generation of the Smart ForTwo was one of the most expensive cars to develop, despite being the smallest in this group. The specifications included some elements made especially for the model, such as aluminium parts, cabin protection, its stability control and a specific ABS. Daimler even built a new plant in France to produce it. Of the first generation, the 200,000 vehicles Daimler believed would sell were not sold, with calculated losses of 3,350 million euros.

It is not easy to pinpoint when Fiat began to fall to the level it occupies today in Europe. But it seems that the culprit could be the Fiat Stilo, which cost the Italian brand 2,100 million euros. Trying to match the success of the Volkswagen Golf was a risky endeavour; although shortly after launch Fiat was already offering significant discounts to buy it, it did not sell even half of what was expected.

The problem with competing against Mercedes-Benz is that it not only requires many millions of euros, but customers also have to be willing to buy it. We don’t know whether Volkswagen executives ever considered the detail that someone who drives a Mercedes would not want to be seen driving a saloon from a “mainstream” brand. As a result, the Volkswagen Phaeton lost more than two billion for the all-powerful Volkswagen.

Long before the MPV craze, Peugeot took the risk of putting a small van on the streets, which was expected to attract buyers with features such as electrically operated sliding doors. The problem was that the 1007 was very expensive; so expensive that Peugeot had to cut the price from 18,000 to 12,000 euros within a few months. To add insult to injury, the Poissy plant, initially dedicated to the 1007, stood as a silent witness to the disaster this model represented for the French brand. The 1007 drained 1,900 million.

In 1997, almost at the same time as the Smart, Daimler launched another compact model that promised much: the A-Class offered front-wheel drive for the first time in the brand, but expectations collapsed spectacularly. Although it was specially prepared to receive a future electric variant, the A-Class hit the market at a time when electric cars were still a dream. The famous failures in the moose test also counted against the A-Class, which cost Daimler 1,700 million euros.

The Bugatti Veyron has become a sports car that has left an indelible mark, as the production sports car with the highest top speed. But the losses on each one sold are also high: 4.6 million euros. According to the German company itself, the Veyron development programme cost the same as fielding a Formula 1 team, so we wonder whether F1 would have saved the brand from losing around 1,700 million euros because of the Veyron. So far it remains a mystery how it has helped sell more Golfs or Polos, according to Warburton.

Jaguar’s ambitions with the X-Type were lofty: to compete head-on with the BMW 3 Series. But although it became the best-selling model in the brand’s history, it also generated the biggest losses, at 1,700 million. The problem was image: a driver accustomed to the brand’s earlier models could not be expected to drive a car that was heavily shared with the Ford Mondeo platform. There were also no diesel engines and no other body styles. It managed to sell 362,000 units, but at a high cost.

Once again, another contender trying to challenge the German luxury saloon divisions. In this case, the third-generation Renault Laguna offered little more than a refresh of the previous models, with some better-quality materials. Although it is still in production, it has cost the diamond-badged brand around 1,500 million.

Initially the Audi A2 was going to be a Volkswagen product, although they soon realised it would be too expensive to develop. Audi took up the baton, with aluminium construction specific to the model, something previously done only on more luxurious models. The selling price was not high, but the profit on each car sold was almost non-existent. Finally, in 2005, Audi decided to stop producing it after 1,300 million in losses.

The Renault Vel Satis: the failure of a car destined to triumph among the powerful

Another example of a car that aimed to shake up the Germans, but did not come close to achieving it. With a design that left much to be desired, it was no match for the stylish saloons of Mercedes and BMW, while costing considerably less. Renault managed quite well to lose only 1,200 million until 2009, the year the Vel Satis went out of production.

Source | Automotive News