Why new car brands are spreading in the pedestrian zones – Economy

The man with the gray hair and the full gray beard looks very young and lively, but at this moment he doesn’t know that a small personal setback awaits him. But of course he will casually ignore that. He is just leaving the Cupra showroom on Munich’s Odeonsplatz and heading for Mercedes’ Programmatic Brand Experience Space across the street.

Unfortunately, that’s how it is, these terms, showroom and brand experience space or simply: studio, are not the only monster words of Anglo-Saxon provenance that you encounter when you want to understand what’s going on in many German inner cities. There are also pop-up stores or even flagship stores, and yes, destinations are also expanding a little outside of the centers. They all compete for customers and buyers.

Each format has its own specific characteristics, stands at different locations in the city and stays there for a different length of time. Hence the different names. In this case, however, all formats are exclusively associated with car brands, mostly with young, new, hip e-car brands, the pronunciation of which not all passers-by in the city centers are likely to be fully familiar with: Lucid, Genesis, Polestar, E.go , Lynk and who knows what’s to come?

“What’s that?” a pedestrian asks her companion, who is arm in arm, pointing her finger at the new auto shop, sorry, showroom. In this case, the car manufacturer Cupra succeeded in creating an eye-catching and wow effect. There is not much to see at Odeonsplatz of the desolation of the inner cities.

The sun is shining, people are strolling across the asphalt again after the long Corona winter, and sometimes it can get pretty crowded inside at Cupra. Up to 650 visitors walk in on a day, says an employee.

And this is not only the case in Munich, the automotive industry is moving to the cities of the largest German cities. Manufacturers are expanding to other European cities and countries, have long been in Italy and Spain, Great Britain, Scandinavia and elsewhere. They are always pushing into the best locations, known in technical jargon as prime locations or high street, or very close to it; the interior decor is only the finest, and some of the shop windows are as big as barn doors. If you look through, you will no longer see Nymphenburg porcelain, nor mannequins clad in Italian designer clothes, but a car presented in the museum like a diamond tiara behind bulletproof glass: brightly lit, sparkling, elegant.

“Are you on Instagram?” “No.” “Do you do yoga?” “No.”

The gray beard introduces himself at the traffic light as the scion of a big industrial family, armor, very big in the Third Reich. In any case, the openness is nice. His name is irrelevant here. But the fact that he is obviously a very convinced Mercedes driver does. He’s already bought five, he says, although it’s unclear whether he means last year or in his entire life.

In the Brand Experience Space of his preferred car brand, a new world opens up for him too. On the right two young women are sitting between green plants on very soft sofas and have decidedly nothing to do with cars. Oh, no, they’re here because of the coworking space, says one and sips a coffee cup. Anglicism again.

Open detailed view

The gray beard has meanwhile worked his way past the Organic Garden Eatery (serves something to eat and drink here), the mixing consoles atop gleaming silver tiles, and, yes, even a car whose wheels rest on islets of green grass. Message: Driving is so eco. Now he builds himself up in front of alleged servants and expresses his interest in cars. But he only reaps pitying blinking of his eyes. “Are you on Instagram?” “No.” “Do you do yoga?” “No.” Fortunately, before the conversation goes off the rails, the interlocutors find a starting point in the photo workshop that takes place here.

However, the young at heart older gentleman still doesn’t really understand. He recently bought a convertible from this highly esteemed brand. And at this location, a square meter costs 20,000 euros, he estimates. “Who pays for all this then?” The question already resonates with the answer that he fears and also receives: “It will be paid for with your convertible money.”

“Manufacturers are increasingly becoming their own brand ambassadors.”

Mercedes had long established itself here, so to speak at the main artery of the heart of the BMW city. But the staging as a programmatic brand experience space is relatively new. In general, at the latest with the move of the IAA from Frankfurt to Munich last year, there was some automotive momentum in the shopping streets of the Bavarian metropolis. Of the four South Korean and Chinese manufacturers (Genesis, Aiways, MG Motor and Lynk) that settled here in 2021 alone, at least two were looking for the exclusive inner-city location: Genesis with its, of course, showroom not far from Mercedes on Theatinerstrasse, and Lynk with a pop-up store on the Viktualienmarkt, where Tesla had already popped up for a limited time.

The strategy is called, not surprisingly, in English: go-to-market. Into the market, where the potential car buyers are, and then nothing like brand building, making the brand name known, building up the brand, looking for direct customer contact. “Manufacturers are increasingly becoming their own brand ambassadors,” says Lars Jähnichen, Managing Director of the IPH retail property group. For the car brands, regardless of whether they are newcomers or established ones, it is better to have “a premium area in an A location” instead of a large number of smaller, decentralized areas spread across the city.

Open detailed view

Alexander Lutz, Germany boss of Polestar, the joint venture between Volvo and Geely, puts it this way: “You can only buy our cars online. The spaces in the inner cities serve to make the brand tangible and tangible for as wide a mass of people as possible close.” At Polestar, they are convinced that, in the future, the design of the vehicle will increasingly decide on the purchase, rather than the technology.

Behind this statement there is quite a change in the way cars are sold. As late as the 1970s, many automobile manufacturers, represented by medium-sized dealers, tended to be closer to the city centre. In the Munich Motorama, different brands were even found under one roof. According to retail expert Joachim Stumpf, in the 1980s and 1990s they moved to the arterial roads of the cities and took over many medium-sized dealers in order to sell directly. At the beginning of the 2000s, they then built new, large-scale, partly architectural icons such as the BMW World in Munich. In France, French manufacturers were building flagship stores, large, glittering temples of representation on the Champs-Élysées in Paris.

Three trends make it possible, or should one say: three crises?

In the course of digitization, the areas are now shrinking again. Manufacturers assume that customers will look on the Internet for the first time before they take a closer look at a car. The shops in the inner cities are there to configure the individual preferences of the customers virtually on the screen and to convey a better idea of ​​the brand. Whether you can also buy a vehicle directly there varies from provider to provider. This is possible with Cupra, but not in the Mercedes Brand Experience Space. The Stuttgart company has one of the largest sales outlets in Munich and a wide network of authorized dealers. The new brands do not have these legacy issues. Cupra, says an employee, wants to sell 500 vehicles a year in the shop on Odeonsplatz alone.

The two branches of Cupra and Mercedes also show as examples: The move of the car industry into the pedestrian zones marks the coincidence of three developments or crises: firstly the trend towards electrification, which is revolutionizing the car industry. Then the younger generation turned away from the car as a means of transport, also for ecological reasons. Established manufacturers now have to advertise themselves with yoga classes. And finally there is Corona and the upheavals that the various lockdowns had on the retail property rental market.

In any case, without Corona, Cupra would not have ended up where Nymphenburger Porzellan used to have its flagship branch. Lucid, a Californian car brand, will soon be moving in next door. Another offer. Despite all the temptations, the gray beard could stay with his old love Mercedes. In the meantime, he has engaged in an intensive conversation with a young employee in the Experience Brand Space.