Despite the massive recalls that often dominate headlines, brand value among automotive companies is increasing. According to the BrandZ Top 100 Most Valuable Global Brands report for 2014, compiled by Millward Brown Optimor, the overall brand value of the car category improved 17% last year, following a 5% rise the year before. The study combines measures of brand equity based on interviews with more than 2 million global consumers using data from Bloomberg and Kantar Worldpanel. Automotive World spoke with Peter Walshe, Global BrandZ Director at Millward Brown, on some of the forces at work behind the scenes.
Brand value on the rise
Walshe believes much of that 17% growth in automotive brand value is due to a recovery in the US economy as well as improvement in Europe, notably the UK car market. The UK’s new vehicle market rose for the 26th consecutive month in April, expanding 8.2% to 176,820 units. “The UK alone has contributed a third of the overall European growth in new car sales for the first quarter of the year,” commented David Raistrick, UK Automotive Leader at Deloitte. China has also had a strong impact, with Walshe noting there has been “good performance for strong efficient brands in China.”
He goes on to add: “Consumer and business confidence mean that big ticket items can again be considered as many had been put off to wait for better times.” This is seen in the numerous categories of the BrandZ study. Walshe notes: “Every category shows growth in our rankings. All except cars are now at significantly higher value than before the recession.”
The question for car companies now is how to sustain this momentum. Walshe believes it will be “still tough for cars, but the stronger brands will win as consolidation continues. The use of technology and adding a better (luxury) experience for all models will sort out the wheat from the chaff. Thinking of consumer needs and continuing the drive to greater engine fuel efficiency and the move towards more sustainable electric/hybrid cars – as driven by governments, not just consumer demand – will challenge both costs and innovation capability.”
Brand leaders
Toyota and BMW have once again topped the rankings. Toyota leads the latest report with a brand value of US$29.6bn, up 21% from 2013’s ranking. In the nine years that the study has been conducted, Toyota has grabbed the number one spot seven times. Walshe describes Toyota as “a definitively defined brand that is quality and value,” and noted in particular its strong perception in the US, where a heavy investment in local production has led many to view it as a ‘local brand’.
BMW wasn’t far behind in the charts, with a brand value of US$25.7bn. BMW had gained the number one spot two years ago, but lost it to Toyota last year.
“Both of these car marques are very distinctive in their own different way,” explains Walshe. “Toyota is a great value brand that has a history (notwithstanding recalls) of quality. In fact, it is highly trusted and has made up most of the loss of trust that occurred in the 2009/2010 recalls. Most of the blame actually was shouldered by the corporate brand, according to Millward Brown BrandZ research, rather than the model brands, which retained their reputation because of the great experience that owners felt and observed.”
As for BMW, Walshe describes it as a “globally coherent brand” and one that has been “entirely consistent in its brand positioning and brand character” and “investing and supporting the brand with good communications. The claim of unrivalled driving experience has been backed up by great premium products.”
Walshe commented that both Toyota and BMW have found success in the three drivers of brand contribution, which is essentially the reason for sales that come because of what the brand stands for: being meaningful (meeting the needs of consumers in addition to creating affinity for the brand), being different (unique in a positive way and being felt to set trends for the benefit of consumers), and being salient (coming spontaneously to mind as the key brand of choice for what consumers think is important for them).
Mercedes-Benz followed close on BMW’s heels with a brand value of US$21.5bn. Honda (US$14.1bn), Ford (US$11.8bn), Nissan (US$11.1bn), Volkswagen (US$8.4bn), Audi (US$7.1bn), Chevrolet (US$4.9bn) and Hyundai (US$4.6bn) rounded out the top ten.
Regional exposure
Of the top 10 brands, only Volkswagen failed to gain value in the latest study, dropping from the estimated value of US$8.79bn in the previous year’s study. The OEM has been hit by pricing pressure in China. In the US, it has not managed to secure the same level of success enjoyed by many of its rivals, in part because it is less exposed there, explained Walshe. In conjunction, the brand has a high exposure in Europe, where sales are only now starting to see a recovery.
There has generally been a correlation between high brand value and a presence in fast growing markets. Walshe explained that this remains true today, “provided brands can command sufficient premium.” As for the traditional growth-driving BRIC markets, he adds: “The Chinese car market is still the most important. India is very big but not contributing so much since low value small cars are still the norm.”
Future leaders
Looking ahead to which players are most likely to top next year’s report, the big question is how GM’s recall debacle will play out. This year’s rankings were done before the trouble hit, so the numbers don’t show any impact. In fact, its Chevrolet rejoined the top ten list for the first time since 2009.
“Other car brands have variously been affected in the past, but this does depend on the seriousness of the issue and on how the company deals with it. Not being transparent and/or being slow to respond or act can be detrimental, particularly in these days of lightning speed consumer social media communications,” notes Walshe.
As for next year’s top brands, Walshe states: “It will still be close, but Toyota might still just edge BWM and Mercedes out of the top spot.”
Megan Lampinen
