Is the European Union solely to blame or not?

Line expansion is a prime example of how a flawed strategy can jeopardize the entire corporate structure. Al Ries, Jack Trout, and – less categorically – Seth Godin have consistently warned against the dangers of diluting a brand by offering too many similar variants. This increases operational complexity and drastically lowers profit margins. Nevertheless, many companies persist in launching redundant models that not only fail to add value but also harm the brand.

A simplified example could be a car manufacturer that not only launches 10 nearly identical SUV models but replicates this strategy across all categories, such as sedans, station wagons, compacts, and city cars. This oversaturates the market, cannibalizes internal sales, and prevents the brand from standing out with a strong, focused product.

Line expansion distracts attention, reduces profit margins, and does not lead to real revenue growth, thereby diminishing corporate profitability. From an operational perspective, this strategy increases production and logistics costs, complicates inventory management, and fragments production efficiency.

The overlap of similar models confuses consumers and limits the ability to leverage economies of scale. Each new model requires additional investments in marketing and distribution without generating a proportional return.

In summary, although European regulations are often cited as the cause of the industry's crisis, many of the current problems stem from ineffective internal strategic decisions, particularly regarding product portfolios.

An alternative could be the approach of Great Wall Motors (GWM), a Chinese company that has abandoned all other vehicle categories to focus exclusively on SUV production through brands like Haval, Tank, Wey, and ORA. By focusing on clearly defined niches and avoiding indiscriminate line expansion, GWM manages to maintain a strong identity and maximize profitability.