Consulting firm Interbrand published its Best Global Brands 2018 report last week with interesting assessments on car brands worldwide. Players in this segment comprised the second largest sector in terms of brand value only after the global technology industry, totaling an aggregate value of US$275 billion for 16 brands.
As the largest automotive company globally in terms of market capitalization (US$200.7 billion) and second-largest in terms of vehicle sales (10.17 million units), it is no surprise that Toyota leads the car segment raking in seventh position out of the total 100 brands competing in the report. But how can Subaru make it to the list with US$25.3 billion of market capitalization and 1.06 million sold units in FY17 when Suzuki (the tenth largest brand by vehicle sales in 2017 with 3.1 million units and a market capitalization of US$27.6 billion) did not make it to the list?
The main reason is that this ranking does not focus on traditional automotive indicators such as unit production and sales or total revenue but on the more subjective total brand value. Interbrand considers three factors to calculate this: the financial returns that an organization offered to its investors (economic profit), the role that a brand plays in its consumers’ purchasing decision (Role of Brand Index) and its strength (measured in terms of ability of a brand to create loyalty among its consumers). This last variable analyzes each brand’s strengths and weaknesses according to 10 internal and external dimensions. Clarity, governance, commitment and responsiveness are the internal dimensions considered, while authenticity, consistency, relevance, presence, differentiation and engagement are the external ones.
So, what brought Toyota to pole position among automotive brands? Interbrand’s assessment enumerates relevance, authenticity and presence as the main strengths of the Japanese OEM. This means that the company has managed to remain true to its internal values and fit consumers’ needs, desires and decision criteria across all population segments and markets that Interbrand considered relevant, while also achieving omnipresence and positive views by consumers. The report highlights Toyota’s efforts to develop and market green vehicles and other mobility solutions oriented toward reducing carbon emissions as positive factors for the company’s assessment.
In the case of Mercedes-Benz, which increased its brand value by two percent to US$48.6 billion since the last report came out and climbed one position in the index, relevance, commitment and responsiveness were the main strength factors. Mercedes-Benz was able to evolve its brand and business to respond or anticipate market changes without losing support in terms of time and influence. In an interview with Interbrand, Bernd Stegmann, Marketing Strategy Director of Mercedes-Benz, said brand significance will continue to play a role in consumers’ decision to buy the company’s vehicles in the future. “In times where products are becoming increasingly more and more digital, and the wealth of technical refinements is growing further, strong brands like Mercedes-Benz can provide security, confidence, and therefore orientation,” he told Interbrand.
BMW did not make it to the top 10 and suffered a 1-percent drop in terms of brand value according to the Interbrand’s assessment, but the German brand managed to retain its 13th position in the list compared to last year. Relevance, differentiation and consistency were the main dimensions of BMW’s brand strength, which means the company managed to fit with consumer needs, desires and decision criteria while also being able to offer a similar brand experience across all of its product formats. Bernd Körber, Vice President of Brand Strategy at BMW, said the brand’s purpose is to offer a pure driving pleasure but it aims at evolving from a mere automaker to a tech company and a premium mobility provider. “Our goal is to provide 100 million customers with our premium mobility solutions by 2025,” he said.
Other highlights of this report include Ferrari receiving the “Top Growing” designation and Subaru entering the list in the 100th position. Both brands stood out for clarity and engagement, which means Interbrand considered that both organizations are well aware of what their brand stands for and know what segments they are targeting. On the other hand, while Subaru stood out for the authenticity of its value proposition, Ferrari stood out in terms of brand differentiation.
Though Interbrand’s assessment of a brand’s value is a less objective indicator than hard statistics such as vehicle sales, exports or profits, it is useful when it comes to understanding the impact of companies’ marketing strategies. According to Doug Karnes, Senior Director for Automotive at Interbrand, the trend in this sector is a shift toward long-time relationships between automakers and car buyers. “Today’s brands that invest wisely in technology to enhance the customer experience will not only survive, but thrive,” he pointed out.
Karnes points out that the industry is undergoing major disruption related to EVs, self-driving vehicles and new shared-mobility schemes, which forces vehicle brands to transform from automakers to mobility providers. “The centuries-old production-based model that churned out new cars in volume is going away, and quickly,” he said. “The future of automotive will be about creating brand value through the formation of brand ecosystems that can deliver great customer experiences at every opportunity.”