Powered by the brand
By: Nick Cooper, Millward Brown Optimor, Wednesday, May 25, 2011, AutomotiveWorld.com
No one would dispute that the last three years have been an especially tough time for the automotive industry: shrinking demand, overcapacity, product recalls and the increasing costs of car ownership for consumers have all taken their toll.
Finally, however, the most recent quarters have seen a significant improvement in both productions and revenues, with all three of the US domestics for instance firmly back in profit, and demand curves rising across the globe.
Nowhere is this turnaround better illustrated than in the recently released BrandZ Top 100 Most Valuable Global Brands report, published by Millward Brown Optimor, a WPP company. It shows that the value of car brands has risen by 7% in the last year, which is the first growth since the pre-recession levels of 2008. To be fair, this is still 27% lower than the peak in 2008, but it is solid progress nonetheless.
In pole position as the Most Valuable Global Car Brand in this year's ranking is Toyota.
Toyota kept faith in its brand with continued investment to communicate positive and reassuring messages, and refusing to keep its head under the parapet.
The story of Toyota's comeback provides a particularly arresting lesson for all brands. In the midst of the product recall of over 8 million units worldwide, the Toyota brand came under serious pressure from governments, dealers and consumers. It is important to note that the company accepted responsibility for the problems and set out a robust action plan to rectify the faults, and in doing so, re-established trust, the essential ingredient for any brand. But just as importantly, Toyota kept faith in its brand with continued investment to communicate positive and reassuring messages, and refusing to keep its head under the parapet.
As any brand advocate will tell you, one of the many benefits of having a brand is that it helps a company through bad times as well as good. Toyota illustrates this perfectly: its brand helped to isolate it from the full financial impact of the crisis and helped it bounce back faster. This year, the Toyota brand value grew by 11% to a staggering US$24.2bn, outpacing the industry and sending it back to the top slot - and to a greater value than before the recall.
And Toyota was not the only car marque to leverage the power of its brand to get ahead. With demand for everyday vehicles up across the board, growth in brand value was seen for Volkswagen (+6% to US$7.4bn), Ford (+5% to US$7.4bn) and Nissan as the highest riser (+17% to US$10.1bn).
It is no accident that great brands belong to great companies, and great companies own great brands.
At the same time, luxury car marques are back. BMW, whilst being pushed into second spot, still rose by 3% to an amazing US$22.4bn. BMW has been working hard to increase the accessibility of its brand through, for example, the 1 Series, and at the same time continuing to set many of the standards in product development, innovation and brand communication. Equally of note is the fact that its local rivals - Mercedes-Benz, Audi and Porsche - all rose this year, with Mercedes-Benz claiming third spot in the sector with a brand valued at US$15.3bn.
This illustrates a number of important lessons:
- First, luxury cars - after taking such a hammering - are most definitely back in fashion (to emphasize the point, Lexus appears in the sector ranking for the first time with a brand value of US$3.6bn);
- Second, it again demonstrates the power of brand. Marques such as BMW, Mercedes-Benz, Audi and Lexus have some of the most loyal consumers of any brand in any category you can think of. This is no accident: investing in the values of the brand, creating marketing communications that embody the brand, keeping the product and service offer differentiated and relevant, and providing the right value equation to consumers, are all critical parts of growing brand value.
- And third, and most importantly of all, growing brand value is a critical part of delivering shareholder value.
It is no accident that great brands belong to great companies, and great companies own great brands. There are virtually no exceptions to this rule - except perhaps, coincidentally, the old British car industry, where great brands were owned by less than great companies. But even here, the power of brand lives on.
We now see the resurgence of Land Rover and Jaguar - and even the resurrection of MG - in the hands of new owners from developing markets. But thatis the point: however technical and complicated car manufacturing is, whatever the funds available for product development, what any business needs for success is a brand - and in terms of the value of brands in the automotive industry, it is fair to say that the emerging players in the industry have voted with their wallets on this one.
Happy motoring.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Nick Cooper is Managing Director, Millward Brown Optimor EMEA
For more information about Millward Brown Optimor, click here: http://www.millwardbrown.com/Sites/mbOptimor/Default.aspx
The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute an Expert Opinion piece, please contact editorial@automotiveworld.com
Published on Wednesday, May 25, 2011
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