Europe – Smart ForTwo ($5bn), VW Phaeton ($2.9bn), A-Class ($2.5bn) were top loss-making models

Posted on: Sep 30, 2013 - 5:44pm IST

Selling something and making a loss. Seems counter intuitive? Well, not so much.

In the automotive industry, selling products for losses is a phase every automaker has to go through. In an industry where fixed costs are phenomenally high, making profits is a tricky game. Most manufacturers suffer huge losses before finally turning pink.

2005 Smart ForTwo
313000000000 – The total amount of money (in rupees) Mercedes-Benz lost on making the first gen Smart ForTwo.

However, there are some cars that have been white elephants for their makers. Automotive analyst Sanford C Bernstein highlights certain models in the industry which have bled the resources of the parent companies.

The Smart ForTwo begins the list of the top 10 vehicles that are billion dollar disasters. The Smart ForTwo, Mercedes’ attempt to crack the small car market, has been the biggest disaster because of the requirement of an ultra-modern platform along with a set of new engines.

Bugatti Veyron Grand Sport Vitesse “Jean Bugatti” edition rear three quarter
Bugatti loses 42 crore rupees on every Veyron that they make.

The old Mercedes A-Class, which also used a highly complicated ‘sandwich’ platform, cost Mercedes close to 1.2 billion dollars over the years. Learning from its mistake, Mercedes decided to use the highly modular MFA platform for the successor to keep the cost down.

A few other notables include the Audi A2, Jaguar X-Type, Renault Laguna even the popular Audi A2 for having emptied the treasuries of their parent companies.

Front of the 2014 VW Phaeton Exclusive
On the previous gen Phaeton (not pictured), Volkswagen lost $2.9 billion, the report says.

A special mention goes to the Volkswagen group which has two models in the list of the highest per unit loss of every car sold. The Bugatti Veyron cost the VW group a staggering $6,700,500 (42 crore rupees) loss on every copy sold. In its first generation, the S-Class rivaling Phaeton bled $40,800 (25.5 lakh rupees) per unit. To be fair, Volkswagen developed these two models to showcase its technological prowess rather than to make profits.

Europe’s 10 top loss-making models

        Vehicle                         Period                  Estimated Loss

  1. Smart Fortwo           1997-2006                $5.0b
  2. Fiat Stilo                    2001-2009               $3.0b
  3. VW Phaeton              2001-2012                $2.9b
  4. Peugeot 1007             2004-2009              $2.8b
  5. Mercedes A Class      1997-2004               $2.5b
  6. Bugatti Veyron          2005-2013               $2.5b
  7. Jaguar X-Type           2001-2009              $2.5b
  8. Renault Laguna         2006-2012              $2.2b
  9. Audi A2                       2000-2005              $1.9b
  10. Renault Vel Satis       2001-2009              $1.7b

Europe’s 10 top loss-making models: Losses per model

       Model                              Years                       Estimated Loss Per Vehicle

  1. Bugatti Veyron          2005-2013               $6,700,500
  2. VW Phaeton              2001-2012                $40,800
  3. Renault Vel Satis       2001-2009               $27,200
  4. Peugeot 1007             2004-2009              $22,300
  5. Audi A2                       2000-2005              $11,000
  6. Jaguar X-Type           2001-2009               $6800
  7. Smart Fortwo            1997-2006               $6500
  8. Renault Laguna         2006-2012               $5150
  9. Fiat Stilo                     2001-2009               $4000
  10. Mercedes A Class      1997-2004                $2100

Back home, there are few models in the our market that are sold at considerable losses by their parent makers. Can you guess them?

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4 thoughts on “Europe – Smart ForTwo ($5bn), VW Phaeton ($2.9bn), A-Class ($2.5bn) were top loss-making models

  1. $@! says:

    Hi Shrawan. Hope you are Good! Thanks for answering my Query.

    It doesn’t look Good when someone’s query is pending for so many days.

    “Back home, there are few models in the our market that are sold at considerable losses by their parent makers. Can you guess them?” – This statement sounds like a Trivia.

    “@Admin & @Kaustubh Please let me know if it’s correct or not & do share the list of loss making Indian cars.” – I specifically asked to share the answers & If your Team wasn’t sure about the answers then you would have communicated the same earlier. Every now & then I was refreshing this page for the Answers & I got the reply from IAB Team only after following up with you guys. Please be more pro-active in answering the queries posted by your Readers.

    Thanks,
    $@!

    Reply
  2. $@! says:

    The few models in the Indian market that are sold at considerable losses by their parent makers are:

    CHEVY: Almost all cars. 😉 (Exclude the BEAT & TAVERA)
    NISSAN: EVALIA
    MARUTI: ESTILO
    FORD: New Fiesta

    @Admin & @Kaustubh Please let me know if it’s correct or not & do share the list of loss making Indian cars.

    Cheers,
    $@!

    Reply
    1. $@! says:

      “@Admin & @Kaustubh Please let me know if it’s correct or not & do share the list of loss making Indian cars.” – This was posted by me on 5th Oct & it was approved by IAB & Today is 12.Oct, Its been 1 week & I din’t get the Reply from IAB Team. If you are not so serious about answering then why to post such articles???

      @Admin, @Shrawan @ Kaustubh This is Pathetic. I am facing this for the Second Time.

      Sorry to say this but you guys are becoming very Unprofessional.

      Reply
      1. Hello Sai, hope you are well. We aren’t sure about the answers, and that’s why we asked readers. We aren’t sure which are the models that are loss making in India.

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About the Author
Kaustubh
Kaustubh Shinde

They say sooner or later your passion finds you. Sometime in late 2009, I started writing for IAB and ever since then it has been a roller coaster ride for me. An amazing experience that has taught me a lot, taken me to new places, driven some great cars and met some amazing people. When you don't find me on IAB (very rarely), you will find me either at a coffee shop or an eatery or at the nearest gadget store.Hope you enjoy IAB as much as we do!