Europe – Smart ForTwo ($5bn), VW Phaeton ($2.9bn), A-Class ($2.5bn) were top loss-making models
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!
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.
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.
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.
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
- Smart Fortwo 1997-2006 $5.0b
- Fiat Stilo 2001-2009 $3.0b
- VW Phaeton 2001-2012 $2.9b
- Peugeot 1007 2004-2009 $2.8b
- Mercedes A Class 1997-2004 $2.5b
- Bugatti Veyron 2005-2013 $2.5b
- Jaguar X-Type 2001-2009 $2.5b
- Renault Laguna 2006-2012 $2.2b
- Audi A2 2000-2005 $1.9b
- Renault Vel Satis 2001-2009 $1.7b
Europe’s 10 top loss-making models: Losses per model
Model Years Estimated Loss Per Vehicle
- Bugatti Veyron 2005-2013 $6,700,500
- VW Phaeton 2001-2012 $40,800
- Renault Vel Satis 2001-2009 $27,200
- Peugeot 1007 2004-2009 $22,300
- Audi A2 2000-2005 $11,000
- Jaguar X-Type 2001-2009 $6800
- Smart Fortwo 1997-2006 $6500
- Renault Laguna 2006-2012 $5150
- Fiat Stilo 2001-2009 $4000
- 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?