Compact cars offer growth opportunities

Compact vehicles are quite simply the place to be if a manufacturer wants to increase new car sales in Europe. Of all the new cars sold in the UK throughout 2012, seven in 10 are considered compact. The number of compact car sales in the UK has risen as consumers aim to downsize their vehicles to improve fuel efficiency amid rising petrol prices. Kia in particular has benefited from this trend.

Kia recently posted increased sales figures in Europe, bucking the trend among vehicle manufacturers in a slowing market that is not expected to fully recover until 2018. Sales have clearly benefited from Kia's compact vehicle offerings. The range is aggressively priced and frequently obtains positive reviews, often topping customer satisfaction surveys.

What has Kia done to break the trend? It has simply offered consumers a value-for-money product in times of hardship. Styling is obviously important, but ultimately consumers need a car that will not break down, and Kia's response has resulted in a 22% increase on year-to-date sales for 2012 within Europe, compared with 2011.

Manufacturers in Europe can learn lessons from Kia's strategy: producing cars that are built around customers' current requirements should be the goal. Currently, this means making sure that they are reliable, fuel-efficient, and priced competitively. Vehicle manufacturers will then not just remain competitive in Europe, they will flourish.

This focus will not continue to reap success beyond economic recovery. Cars are inherently aspirational and consumers will always look to purchase something more luxurious in times of growth. That said, gaining market share in an economic downturn can be beneficial and will leave Kia very well placed when the market recovers as long as its strategy remains flexible.