The Brand Game in the Automotive World

A keen observer of the shifting trends in the automotive world will not fail to notice the rapid pace with which car makers are changing these days. Auto makers are becoming increasingly more flexible, adopting radical new ways that only a decade ago would have been unthinkable. This is not optional, of course. It’s a matter of survival. Tradition is dead. You can no longer be set in your ways. Dynamism is all the rage, and a lot of the major auto brands are doing a fairly good job keeping up with the changing tide.

In fact, auto makers dominate the Interbrand‘s Best Global Brand’s ranking, boasting the highest number of brands in the top 100, and having two representatives in the top 10.

That brings us to what I like to call the Brand Game. That is what encapsulates all the improvements a car maker – or any other business for that matter – has to make in order to remain competitive in the age of change. It’s about clarity and purpose and distinction. These are what matter to customers these days, perhaps even more than the traditional qualities like value or cost or the nationality of a brand. Even the question of “image” has changed a lot. What is considered “cool” these days is way different from ten or fifteen years ago. Surveys have shown today’s customers, especially the millennials, are willing to pay more for a brand and, stick with it for longer, if they feel connected to image of that brand. That’s why the clarity of purpose is so important.

So BMW makes the ‘i’ brand, Mercedes goes with EQ, Hyundai launches the Genesis and N sub-brands, and Citroen has the DS brand. Distinction is crucial, and so is the design – the corporate look, if you will. As a matter of fact, design is one of the biggest criteria in the best global brands ranking, and one of the main reasons why Technology and Automotive sectors occupy the top two positions in the index with a combined 31 positions in the top 100 ranking, surpassing the old-world top dogs from Financial Services and Consumer Goods. They have only one player in the top 10 this year: Coca Cola.

Top 5 Sectors

1. Technology                   USD $675,239m
2. Automotive              USD $266,827m
3. Financial Services       USD $121,145m
4. Beverages                     USD $107,727m
5. Retail                             USD $ 96,493m

The really interesting part is that the auto sector has done even better than the tech sector which includes such giants as Google, Apple, and Microsoft. These guys are still at the very top of the chart, but given the kind of products offered by Mercedes-Benz and Toyota – the auto sector’s representatives in the top 10 best global brands this year – compared to the tech services, it has not been too shabby a performance.

Top Performing Sectors

• Automotive (16 brands)
• Technology (15 brands)
• Financial Services (12 brands)
• Fast-Moving Consumer Goods (9 brands)

A large part of this result is due to the flexibility auto makers have shown in keeping up with the trends, whether in technology or design. This is the reason cars are getting facelifts so often these days. We will get to the point where we’ll have a new-look version of any given car model at the same rate we get new iPhones every year. The social image is another important factor, like how big an effort a car maker is making in cleaning up their carbon baggage, or how well they treat their workforce and all that. But the most important factor of all is user experience. It’s the overall package. It’s about how you feel using a product or service. All the aforementioned considerations lead you to try a particular brand, but how you connect with it is what makes brand loyalty.

So how do car makers ensure their brand game is “on the lock” in the parlance of the today’s youth who make up tomorrow’s customer base? Well, according to the Intrabrand report it’s all about the change: “Grow, Change, Grow.” It is rather astonishing the rapidity with which auto makers have embraced this model, given this industry’s historical resistance to any meaningful change. The story of the automobile is basically a 100 years of doing pretty much the same thing over and over again. Maybe in some twisted way we ought to thank climate change and the fossil fuel crises for forcing the auto industry to reinvent itself with electric powertains, autonomous technologies and who knows what next.

Interview with James Hoostal, Interbrand’s Automotive Practice Lead

What are the major criteria for an auto brand to make it into the top ten?

The criteria is the same for auto as all other industry brands:

1. At least 30% of revenue must come from outside of the brand’s home region.
2. The brand must have a significant presence in Asia, Europe and North America and have a public profile and awareness across the major world economies.
3. There must be sufficient publicly available data on the brands financial performance and economic profit must be expected to be positive over the long term, delivering a return above the brand’s cost of capital.

Does a brand’s history and perceived prestige play a role in its ranking? 

Yes, to a degree although the measurement of brand value goes much deeper. 10 factors that comprise Brand Strength – there are 4 internal and 6 external factors that are part of the formula.  Another measurement is Role of Brand which considers the role the that the brand plays in consumer purchase decisions, relative to its competitors.

What steps can a given brand take to ensure a higher ranking in the next survey?

Brands must consider a number of factors to improve their ranking, both internal and external factors.  See the website for details on the criteria and methodology.

How big an impact a brand’s technological stance have on the results?

It depends on the industry and the competitors that the brand is facing.  Technology does play a significant role for automakers because of their products….cars are technology masterpieces!

Environmental image of a brand – is that something you take into account?

Yes, though it is only one factor of many and the brand valuation is based on a more broad analysis of the brand.

I can see that customer service plays a big rule on any given’s brands ranking. How about their treatment of their own workforce.Is that of any consequence?

Yes, absolutely.  A brand’s workforce/employees are a part of the internal measures that are considered.  The company’s/brand’s internal culture, how it treats and manages its employees, has an impact on the valuation.

Design, technology, value – which, in your opinion, is the most important for the future of a brand?

This depends on the industry and the competitive landscape a brand faces.  For automotive, all three of these factors impact the future value.  Because of the rapid changes facing the auto industry, technology is a major factor and influencer, how well a brand is embracing and investing in new developments, such as autonomous driving, ride sharing and digital tools for the empowered consumer all play a role in the valuation.

Top 10 brands of 2017